Excessive Credit Card Debt Strategies
The use of credit cards is so widespread, so much a part of Western culture that many people believe they could not live without them. There is an alternate view, and that is that credit cards are simply too dangerous to too many people. And this is due to the fact that there is excessive credit card debt out there in the wider community. However, you can’t pull the shutters on the credit card industry just because of a few irresponsible people (or even if it’s more than few). The industry needs to have a voice in any solution. Shutting them out will not lead to a solution. Moreover, you can’t overlook the benefits associated with the credit cards.
There are two ways of looking at excessive credit card debt. First is addressing of the excessive credit card debt problem at the industry level and second is the addressing of the excessive credit card debt problem at the individual’s level i.e. the individual borrower. Initially, it is important to raise general awareness of the problem of out of control credit card debt. We are seeing this begin to happen already. However, there should also be an effort to tackle this problem of excessive credit card debt at an even deeper level. This means trying to devise a mechanism to nip the problem (of excessive credit card debt) in the bud. This really should be part of a larger plan. Any such system would require significant thought and planning. Case studies should be taken up, statistics gathered and a proper forum formed (with representatives from the credit card holders and from the credit card suppliers).
It is unavoidable – the credit card suppliers just seem to be engaged in coming out with new products and getting customers enrolled to those products. There is little attention paid towards addressing the problem of excessive credit card debt in the real sense. Education should be part of the application process for all new credit card recipients.
Another way of dealing with the problem of excessive credit card debt could be: developing a system for calculation of applicable credit card limit at the individual level i.e. no standard/product-based credit limits and all credit offerers would have to abide by that ceiling. Then there could be mechanisms for proactively warning the users about excessive credit card debt (based on their credit card usage) or even imposition of early restrictions on noticing the first signs that lead to excessive credit card debt At the individual’s level, the treatment of the problem of excessive credit card debt would include following of best practices (on credit card usage and avoidance of excessive credit card debt) by the individuals themselves. A checklist or a set of questions could be provided to individuals for recognising the first signs of excessive credit card debt.
So, the problem of excessive credit card debt can surely be dealt with by putting together some serious thinking at a broader level together with discipline at the individual’s level.
Filed under: Financial Advice