Getting the Real Story

There is no question that credit card abuse/mismanagement is a problem in North America. The banks behind these products are making unbelievable amounts of money off of the lower and middle classes because it is a mostly unregulated industry and allows them to prey on the economic circumstances of people (read this to get a better idea of the tricks they use). I have some strong thoughts on this. In fact, I've voted for a political party in a past federal election almost solely on the basis that their campaign included the promise to put strong regulations on the credit card/personal lending business. However, that is not what this post is about.

A little while ago, I was listening to a podcast and heard some shocking figures on credit card debt in the US. The statements that stuck out were that the average American carries about $8,000 in credit card debt and that in one state (I think New Jersey), the average person holds 10 different credit cards. Pretty unbelievable at first, but I've heard numbers like this before.

It piqued my interest and I went looking for some basis for these numbers. I found several things that corroborated these types of outrageous "facts" (another is that the total personal debt in the US is greater than the Gross Domestic Product of all of Canada), but never from any sort of a credible source. Then I stumbled onto this article on MSN Money (a reputable Microsoft news site). It completely debunks the myths being perpetuated about this topic and says we are not really in that bad of shape compared to what we have been made to believe. Whether it is right or wrong is debatable (the guy who runs Microsoft, Bill Gates, has been touted as the devil in some computer geek circles), it just shows that there are an infinite number of opinions and viewpoints in every debate.

There is really no point to all of this other than to filter out a lot of what you read and hear as rubbish.

Here is a good article on CBC.ca that dissects the misunderstanding of how credit card fees work which is a much more useful take than discussing the magnitude of the problem. This is the type of information that will actually help solve the problem on an individual basis. Disclaimer: I'm a fan of the CBC so I may be a bit biased. Remember; take everything with a grain of salt.