Most every day we tell people that they need to get their credit card spending under control.  It’s a good idea to have three outstanding credit cards at once, at the most.  Still, this is not stopping credit card use from going up.  A recent study about credit card debt shows that it’s spiked to the tune of 790 billion dollars.  Credit card debt is rising four times faster than it was only eight short years ago.

Why is this?  The main reason the survey states is that people are finding it much harder to secure loans based on the value of their homes.  This is core to why the housing crisis contributes very directly to an overall credit crisis.  With home values fluctuating, lenders are wary of lending too much money based on the current value – even if that homeowner has built up equity.  What does that matter if the equity is worth less than it might have been six months ago.  

So what happens?  People look for another way to secure credit: namely the easiest loan in the game, the credit card.  To look on the bright side, the rise in credit card debt is not necessarily because every person is charging a trip to Bermuda.  Simply, the rise in credit card debt is because more people are using credit cards.  They’re a basic way of life, so the rise in credit card debt is fairly understandable without it suggesting that people are being overly irresponsible.

Except look down at the survey a little further.  As many as 35% of credit cardholders pay their bills late every month.  That’s just too much.  Mainly what is worrying about a study like this is it suggests that credit card debt could face as drastic an implosion as the mortgage market.  The subprime mortgage mess wasn’t only the case of predatory lenders looking for easy bait, it was about everyday people taking on a mortgage without fully investigating the consequences.  The same could be said about credit cards.  On the bright side again, credit card debt does not carry the same kind of weight as mortgages.  Sure, there is 790 billion dollars in outstanding debt, but that’s because of the vast number of people who have credit cards.  

Another way of putting that: not everyone owns a home, but a great majority of people have at least one credit card.  This means that the 790 billion dollars is spread over a larger number of people, so defaults are not going to affect the credit card industry in exactly the same way that it brought down mortgage lenders.  The healthy profits of Visa and MasterCard bear this out.

So while high credit card debt is not great news, there’s a reason that it’s so and the debt doesn’t necessarily mean that the sky is falling.  

Manage your business portfolio effectively to minimize risk. When you do business with multiple accounts, getting that all-important “bird’s eye view” of your account management can be difficult. You can manage your business portfolio easily and minimize business risks with Account Advisor from Experian.

Experian Account Advisor Provides Proactive Account Management

Experian’s Account Advisor is an online account management system that lets you easily identify important changes for your accounts. Minimize business risk with online analysis of risk trends, account trends and business portfolio management that includes a risk score, payment history and balance (as applicable). The bird’s eye view of your business portfolio also alerts you to potential growth opportunities and account delinquencies, so you can plan account management activities accordingly.

Minimize Business Risks with Online Account Management Tools

Online account management tools help you minimize your business risks by providing information that includes overall business portfolio activities as well as information about individual accounts. The information provided by Experian Account Advisor can be easily viewed as spreadsheets or used in a mail merge. The multiple online account management tools make it easy to turn information about customers and clients into a presentation-ready document to use for weekly, monthly or quarterly performance reporting.

Learn more about online account management tools from Experian.

• Deposit money into a separate savings account directly from your paycheck.
• Set up a monthly transfer from a checking to a savings account by your bank.  
• Just make the decision to deposit money – whatever you can afford – every month. 

Faced with an economic downturn, many small business owners are confronted with escalating debt that can quickly become a credit nightmare. In the Financial Headlines this morning, there’s new information about the struggles small businesses are facing in the face of a recession. Discover Financial Services provides information about how small companies (with less than five employees) are handling the economic downturn.

Poll Shows Small Business Owners Struggling with Effects of Economy

In a Discover-sponsored poll that queried small business owners about their confidence in the economy, 28% of business owners said that they have had to borrow money to pay bills for their business. 59% of business owners said the new government rebates won’t have much impact on their business. And 41% of small business owners said that the economy has resulted in reduced business spending.

Small Business Owners Hit Hard by Economic Downswing

As one friend recently said to me, the credit nightmares are no longer a domino effect- they’re now causing a boulder effect. And as so often happens during an economic downturn, its small businesses that can get hit the hardest, and struggle the most to stay alive. As interest rates remain perilous, small business owners are seeing their credit lines reduced or eliminated, further discouraging business expansion. Problems at home with personal debts just serve to make the whole situation even worse.

If you’re experiencing too much debt and not enough relief, consider a low interest loan from LowerMyBills.com. LowerMyBills.com lets you compare rates from multiple lenders before you get a loan so you know you’re getting the best deal.