Credit Card Debt in America

1682 Words Oct 28th, 2008 7 Pages
Inga Gudmundsson
15 October 2008
English 100
Analytical Essay


Credit card debt is one of this nation’s leading internal problems, and it has been for around the last 3-4 decades. When credit was first introduced, and up until around the late 1970’s up to today, the standards for getting a credit card were very high; so not everybody could get one. The bar got lowered and lowered to where, eventually, an 18 year-old college student with almost no income and nothing to base a credit score on previously could obtain a credit card (much like myself). The national credit card debt for families residing in the United States alone is in the trillions (Maxed Out). The average American family has around $9,000 in debt, and pays
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These rates do not just do this on their own. They are caused by a factor called “universal default.” (Jaffe) The universal default, written in all of the small print that comes with every newly issued credit card, states that if one is more than 30 days late on a credit card payment, the rate of interest on these debts will increase dramatically (Jaffe). Ironically, the “universal default” is not “universally known and understood.” This all really started in 1978, when the Supreme Court decided to leave the interest rates up to State Government (McGeehan). This caused many banks to move their credit card operation stations to states that had removed caps on interest rates, such as South Dakota and Delaware (McGeehan). What has been happening lately, which is not quite yet illegal, is that credit card companies will apply this universal default rule to not only the 30-day late payment period, but will apply it to missing mortgage payments, utility or car payments, carrying too much debt in the first place, using over half of your credit limit for most of your credit cards, and many more things (Jaffe). This is causing people left and right to double their debt with interest rates. For every $1 in principle spent by the average American, they are paying around $2-3 dollars in interest (Maxed Out). However, the aggressive tactics used by these lenders (in raising interest rates and charging unnecessary fees) have

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