Unemployment and credit card debt
Image courtesy of fortinbras / Flickr
Americans are putting their plastic to use at record rates — the Federal Reserve reports that people have racked up $14 billion dollars in credit card debt in June alone. It’s a true sign of tough times says Gail Cunningham, Senior Director of Public Relations at the National Foundation for Credit Counseling.
Cunningham says unemployment, which is at a four-year high, is putting pressure on consumers to use credit cards: "Statistics show that when you lose your job, it typically will take you one month of job search to replace each $10,000 dollars in lost income. So if you have a $50,000 a year job, it’s going to likely take you five months to replace that job with that type of income.
"Now, during that interim, since Americans are great spenders and lousy savers, the consumer probably doesn’t have any savings to fall back on, so he lives off his credit card. He’s well-meaning — noboby intends to dig a deep financial hole — he thinks that tomorrow will be better, that new job’s right around the corner; but he’s raking up a huge debt load after losing his job and trying to keep his lifestyle going."
"The Takeaway" is PRI’s new national morning news program, delivering the news and analysis you need to catch up, start your day, and prepare for what’s ahead. The show is a co-production of WNYC and PRI, in editorial collaboration with the BBC, The New York Times Radio, and WGBH.
More at thetakeaway.org
PRI’s coverage of economic security is supported by the Rockefeller Foundation and its Campaign for American Workders.
The story you just read is available to read for free because thousands of listeners and readers like you generously support our nonprofit newsroom. Every day, the reporters and producers at The World are hard at work bringing you human-centered news from across the globe. But we can’t do it without you: We need your support to ensure we can continue this work for another year.
When you make a gift of $10 or more a month, we’ll invite you to a virtual behind-the-scenes tour of our newsroom to thank you for being with The World.