How To Eliminate Credit Card Debt - Beating Fear and Shame
One of the barriers to being able to eliminate credit card debt can be psychological. The credit card debt itself may have grown like topsy or just crept up on you unawares. All of a sudden it is out of control, and you cannot prevent it rising let alone eliminate the debt. The psychological barrier can come from a sense of fear and shame, of being found out by friends, relatives and peers: your credit card debt has spiralled out of control. The barrier takes the form of not being able to take positive steps to eliminate the credit card debt you have accumulated.
A starting point to overcoming that feeling of fear and shame is to put your situation into perspective. You are not alone. In fact, you are far from being alone. Take a look at the statistics below, and your credit card debt will take on a new backdrop.
Credit Card Debt In Perspective
Some recent statistics (February 2005) of credit in my own country, the UK, show the scale there:
Consumer debt problems are common - more than 10% of consumers have problems paying their debt
Total credit card debt in February 2005 was £54.3bn, or about US$103 bn.
Spending on credit cards reached £269 billion for the year 2004, overtaking cash payments, which were around £268 billion.
Number of Credit Cards, according to Datamonitor, exceeds the number of people by 67 million to 59 million. The UK, with its poor consumer credit record. Credit card possession and use is an addiction in the UK, with the UK accounting for more than 55% of European total.
Credit cards issued have now reached 160.6m, which is a growth of 13 million cards in 12 months. The average adult now has 3.5 credit cards.
Servicing Debt
The findings of an independent commission, chaired by former Downing Street policy chief Lord Griffiths of Forestfach, included the warning that any major external shock - such as an oil price explosion - would create serious economic and social problems for the 15 million people in the UK who struggle with debt repayments.
Credit counselling.
The number of people contacting the Consumer Credit Counselling Service (CCCS) for help continued to rise during January 2005 as consumers took stock of their borrowings in the face of rising interest rates. CCCS said it had seen a 12% rise in the number of people contacting it compared with January 2004.
The burden of debt for CCCS clients increased dramatically during 2004, according to the charity's latest figures. During the year the average debt burden of clients making repayments through CCCS rose by nearly £2000. The average debt figure increased from £21,660 at the beginning of 2000 to £26,800 at the end of December 2004.
Information gathered by the Consumer Credit Counselling Service and Age Concern reveals that, excluding mortgages, those in their 50s owe an average of 1.69 times their net annual income, compared to 1.19 for the under-50s. The rate of growth of this debt has been faster among those in their 50s in the past five years - 20 per cent, compared with 4 per cent for the under 50s.
The burden of debt for CCCS clients increased sharply during 2004, according to the charity's latest figures. During the year the average debt burden of clients making repayments through CCCS rose by nearly £2000. The average debt figure increased from £21,660 at the beginning of 2000 to £26,800 at the end of December 2004.
Reasons for Credit Card Debt
In both a household survey and a survey of Citizens Advice Bureau clients, the top three reasons quoted by those suffering debt problems, were:
1. Sudden change in personal circumstances – resulting typically from job loss, relationship breakdown or illness;
2. Low income – the consequences of living for a long time on a low level of income; and
3. Over-commitment – in some cases related to money mismanagement.
The number of consumer debt problems dealt with by Citizens Advice Bureaux has risen by nearly three quarters over the last seven years, figures released today by the CAB reveal. Consumer debt issues seen in bureaux stood at 706,700 in 2003/4 compared with 405,800 in 1996/7 – a rise of 74%. Bureaux dealt with nearly 1.1 million debt-related issues last year, a figure that also includes housing, utilities and benefits-related debts. But consumer debt is by far the biggest type of debt problem for which people come for help.
Beating Fear And Shame Of Credit Card Debt
