For many people, credit cards are a convenience that allows them easy purchasing and access to valuable rewards programs. For others, however, credit cards pave the road to crushing consumer debt.
Unfortunately, credit card companies themselves often do little to help consumers use their cards responsibly. Once a person misses a payment or two, high interest rates and late fees kick in, making it more difficult for the consumer to get out of debt. In this way, people using credit cards to cover one-time or seasonal expenses can find themselves permanently trapped in a cycle of debt.
Increasingly, however, major credit card companies are no longer the only players in the credit card game. According to a recent report, retail cards are on the rise all over America, particularly here in Washington.
Retail cards are credit cards created and offered through retail establishments, such as Wal-Mart. Often, they are accompanied by attractive offers for free store credit upon signing up, as well as rewards points to spend towards purchases in the store. In effect, however, they operate very similarly to other credit cards.
With the holiday season approaching, these types of cards appear to be on the rise in America. While both bankcards and retail cards took a dive following the 2008 recession, retail cards bounced back much more quickly; they now stand at 89 percent of their previous levels. This is particularly clear in the region around Salem, Washington, which was identified as a hotspot of retail card activity.
While these cards could be a sign of improved consumer confidence, experts note that overall credit card debt has not gone down in recent years, suggesting that many peoples’ economic position has not greatly improved. Experts caution against overspending and carrying a credit card balance, as this can quickly lead to heavy debt.
Being in debt is a difficult position for one to be in. For many, paying down one’s credit card balance may be impossible, especially if the problems are exacerbated by a persistent unemployment. In these cases, consumers facing credit card debt often look to Chapter 7 or Chapter 13 personal Bankruptcy as a way to start anew.
Source: Inside ARM, “Retail Credit Card Grows, Despite Flat to Slightly Rising Credit Card Debt Overall” No Author Given, Nov. 05, 2013