Credit card debt is like crack for the American consumer. A cheap alternative to pure spending cocaine but enough to keep you on the hamster wheel of consumption. I recently discussed how credit card debt while remaining subdued since the Great Recession suddenly made a 180 degree turn. Americans are spending money they don’t have on shiny plastic. Total outstanding credit card debt recently surged beyond the $900 billion mark. That is a lot of consuming. And with the average nationwide interest rate of 14% that means spending hamsters are probably dropping tens of billions on interest costs alone. I found it interesting that I got a few e-mails proselytizing how great credit cards were after my last piece. My reaction: So you enjoy locking in future earnings for money you don’t have today? Keep in mind people pray to the hedge fund gods for a 7% annual return. Getting a 14% return is like finding El Dorado had a sister name AmEx. It is amazing to get a 14% return (and with some cards, you are getting close to usury). Equifax released credit card data on 25 US metro areas and the results are startling.
(Read the rest of the story here…)