Credit Card Debt

Consumers' available credit limits on their credit cards have jumped significantly. Between 1996 and 2007, credit limits on consumer credit cards increased by nearly 100 percent to a total of $2.55 trillion dollars of available credit lines for consumers (revolving and non-revolving). As of 2007, credit card debt is one-third of total consumer debt. This increase means that consumers are increasing their debt at a rate of about 6% - 7% per year.

The most common credit card line is now $3,500, as opposed to the typical $2,000 limit just two years ago. The average account balance has also increased from $1,479 in 1996 to $2,000 in 2006. Slightly over 36% of consumers owe more than $10,000 in credit card debt, but most of the 36% make $50,000 per year or less. The average interest rate on consumer credit cards is 18.9%. For college students, 83% have at least one credit card and the average balance on their cards is $2,300.

The Consumer Federation of America has also issued a report on what it calls the irresponsible promotion of credit cards and credit card debt and points to the increase in limits as an example of banks' willingness to lure consumers into an often dangerous path of credit dependency. The Federation also points to the solicitation of both high school and college students for credit card applications. Some states have begun to put controls on when, where, and how credit card solicitation of students can occur.

Are banks acting in a responsible fashion with their solicitations of consumers and students for credit cards and increases in credit card lines? What responsibility do consumers have with regard to credit card debt? What disclosure rules apply in banks' solicitation of credit card customers? What should the banks do to influence legislation?

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