In Sunday's column
, Frank Rich links
to a story where we read:
In 2008, the average credit card balance was $11,212, according to CardTrak.com.
With a balance of $11K, and an APR rate of 15%*, we're talking $140 per month in interest charges. But any slippage in payments and the APR typically jumps to 29%, which would mean a monthly interest-only payment of $265, which is serious money for most people.
The thing is, people can probably manage a "maintenance level of debt" by only paying the interest, but to pay down the debt or deal with an increase of debt (through more buying) is much harder. Lots of people are stuck in this economy with a locked-in drain from their purchasing power. That will make any consumer driven recovery much more difficult to achieve.
* I have excellent credit, never miss a payment, pay off the full amount every month, and that's the interest rate I get from Wells Fargo for purchases (it's a higher 21% for cash advances).
My credit rating is 752. Beat that!
Last time I checked (~2 years ago) mine was 787 out of 830 (Experian).