The Heller School for Social Policy and Management, Brandeis UniversityNational Program on Women & Aging
Women & Aging Letter
Excerpt, December 2000Household Debt and Savings: Private Concerns, National Issues
Volume 4, Number 6Money behavior as a family issue is more important than ever as young and old alike realize they must now take on increased personal responsibility for saving to achieve a secure financial future. Yet, the United States has experienced a declining savings rate during the past two decades. In international comparisons, the US savings rate is historically low. Personal bankruptcies have increased from fewer than 200,000 in 1978 to more than 1.25 million in 1999. And the number is expected to increase by 10-20 percent in 2001. Both the low personal savings rate and the increasing number of personal bankruptcies have provoked national concern.Credit Card DebtDo You Love Your Credit Card?
If you love your credit card, you are not alone. In 1968, revolving consumer credit was $2 billion; by mid-2000 that number had exploded to $626 billion. In 1998, almost three-fourths of American families had one or more credit cards, and about 40 percent of all families owed a balance on a credit card after their most recent payment. A recent survey found that 42 percent of credit card holders thought that using credit cards is a good thing.How Do You Use a Credit Card?
Is your credit card a substitute for cash and checks or is it a source of mounting debt? In 1998, 55 percent of families surveyed had carried over (revolved) a balance in the previous month. This year 35 percent of credit card holders reported that they hardly ever paid their revolving accounts in full. In 1998, the average balance held on a credit card was $4,073. In 1995, 11 percent of all families with debt had a ratio of debt to family income of over 40 percent; and seven percent of all families had a debt payment that was 60 days or more past due.Can You Manage Your Credit?
Do you feel that you can manage your consumer credit but that other people might be having problems? This year over 80 percent of credit card holders agreed that credit card companies make it hard for people to get out of debt, and over 90 percent agreed that offers of short-term, introductory low interest rates probably mislead a lot of people. Most felt that credit card companies make too much credit available to people. If you agree, you might be interested to know that "preapproved credit" mailings in the US grew from one billion in 1991 to three billion in 1997. A typical household that year received 41 preapproved credit offers, averaging $243,000 in potential credit card debt per household. Outstanding credit-card debt nationwide doubled between 1993 and 1997, to $422 billion.
Resources on Debt and CreditKnowing and Understanding Your Credit
Fannie Mae Foundation, North Tower, Suite 1, 4000 Wisconsin Ave. nw, Washington, DC 20016Getting Smart About Credit
National Foundation for Credit Counseling, 8611 Second Ave., Ste 100, Silver Spring, MD 20910 tel: 800-388-2227 www.nfcc.orgSelecting a Credit Card
By Marsha A. Goetting and Elizabeth E. Gorman.
For a single copy, send $2.95 to: Extension Publications, PO Box 172040, Montana State University, Bozeman, MT 59717, tel: 406-994-3273To locate a credit card that is best for you:
www.bankrate.com
www.banx.com
www.cardtrak.comFor a printed copy of the list of cards and rates:
Send $5 to RAM Research, PO Box 1700, Frederick, MD 21702, tel: 800-344-7714.
Specialized Credit ProductsSponsored Payment Cards:
www.pocketcard.com
www.colbaltcard.com
www.collegeparent.orgDebit Cards:
www.aarp.org/confacts/ money/debitcards.htmlSecured Credit Cards:
www.bankrate.com
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