While all eyes has been on the debilitating subprime mortgage crisis as the catalyst of the current financial crisis, there is a looming problem that deserves public attention. Plastic money.
According to latest information gathered by the US Census bureau, there were 164 million credit card holders in the United States in 2005 and that number is projected to grow to 176 million Americans by 2010. These same Americans own approximately 1.4 billion cards - an average of nearly nine credit cards issued per credit card holder. The number of credit cards circulated in US is larger than the rest of the world combined according to David Robertson, publisher of industry newsletter the Nilson Report. The total credit card debt of America is a staggering $962 billion and the average household in 2008 carried nearly $8,700 in credit card debt (Federal Reserve Statistics). In fact, Bank of America revealed on Oct 6 that $3 billion of it's $184 billion credit card portfolio has soured, a 50% increase from just a year ago.
In Canada, 25% of 4000 Canadians surveyed had $10,000-$40,000 consumer debts excluding mortgage.
In 2003, South Korea's economy was hit by credit card crisis where nearly 4 million South Koreans defaulted.
What is the cause the problem?
People are spending more than they are earning, compromising their future with temporal satisfaction. This is a result of generation than yearns for instant gratification with tomorrow's money. In essence, people are lured to the bliss that materials promise to provide - but that is never true. While basic necessities are required, true happiness comes from cultivating meaningful relationships.
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