Why Americans Should Not Use Credit Cards

Why Americans Should Not Use Credit Cards

Erin L. McElroy

Axia College of University of Phoenix

Poor credit choices are leading to poor Americans. Estimates from earlier this year show revolving consumer debt in the United States, at a whopping $874 billion dollars (Federal Reserve Board, February 2010). What does this mean to Americans and what should it mean to Americans? We’ve come to the point in our economic history where immediate gratification is hand-in-hand with living beyond our means. Whatever happened to, “If you can’t afford it, you don’t need it”? We can compare revolving credit (a type of credit without a pre-determined number of payments) with opening the lid on Pandora’s Box. As a society, we are consumed with purchasing items that cost more than we can afford. This causes us to live beyond our means, which increases our personal debt, increases our stress levels, and can also increase our interest rates if we slip up and miss even one payment. Keeping today’s American economy in mind, Americans must ask themselves if the use of credit cards is a wise idea.

The average American carries approximately $3700 in revolving credit debt, mostly on credit cards. That is $7400 in a two income family (IndexCreditCards.com using government debt and census data, February 2009). According to a table found at the United States Census Bureau, (Table found here: http://www.census.gov/hhes/www/income/data/statistics/index.html# I used the table based on a two year average by state) the average two income family in California makes slightly over $56,000 a year. That means that almost two months worth of salary from both incomes must go toward paying off credit card debt. Many Americans are using credit cards to survive from month to month because their salaries aren’t covering the expenses. This is basically a poor way to finance daily living because it could take years to pay off the accrued debt. In the event of a job loss or hours being...