Here’s a shocking statistic that explains just why so many U.S. residents are turning to debt consolidation loans: Americans charge nearly $2 trillion worth of purchases every year, according to a recent report by CBS News. That’s a lot of spending put on plastic. And it explains why U.S. consumers so often struggle with their debt. It also explains why so many card holders reach the point where they view debt consolidation loans as their only option.
Struggling With Debt
Debt consolidation loans are attractive to consumers with overwhelming debt. Companies that provide these loans take consumers’ multiple monthly debts and consolidate them into one single payment. Consumers then avoid collection calls and legal action from their creditors by paying a single fee each month. These loans aren’t ideal, though: They often come with hefty origination fees and interest rates. But as long as the country continues to rely so heavily on credit cards, you can bet that the debt consolidation business will only grow.
Addicted To Plastic?
The CBS News report quoted John Ulzheimer of Credit.com as saying that more credit cards are issued in the United States than in any other country. In total, about 700 million credit cards are issued in the country every year. To put that into perspective, that equals two cards for every U.S. resident, even those too young to use them. The same story quotes Ondine Irving of Card Analysis Solutions, who says that U.S. consumers have been living on inflated incomes for the last decade thanks to their reliance on purchasing big-ticket items on credit. And in even more depressing news, U.S. consumers have a total credit card debt of $775 billion. This amount of debt is a big reason why the Great Recession, which the country is still trying to fight its way out of, hit so many consumers so hard: When they lost their jobs, they simply had no way of slowing their ever-growing monthly credit card debts.
Weigh Debt Consolidation Carefully
Consumers who do face hefty credit card bills should weigh their debt consolidation options carefully. While the terms of these loans are far from ideal, the financial peace of mind that they can provide might be worth the high interest rates and origination fees. For consumers who feel as if they are drowning in debt, those whose money woes are keeping them up at night, a debt consolidation loan may be the perfect tool.