Christian Debt Recovery

National Credit Card Debt Statistics

January 21st, 2008 |

Author: Gavin

Credit Cards Are Just Plastic Cash

In today’s economy almost every adult has at least one credit card. In fact in 2004 the Federal Reserve reported non-mortgage consumer debt reached $2.1 trillion. On average that equals $17,530 per household, up from $16,035 the previous year (2003). The average car loan financed in 2004 was $24,888, for a length of five years. As debt increases, so does bad debt. When an individual’s debt to income rises over 25-30%, the likelihood of stepping into insurmountable circumstances is inevitable. Many have theories from skyrocketing credit card approvals to societal trends. No matter which reason, it is now more important for a property manager to recover debts because competition and home ownership make rental profits that much more elusive. The first step in recovering bad debt is to actually reduce your risk in having unpaid rents in the future. A solid resident screening program is number one in weeding out the potential residents that may have debt troubles. Reviewing a applicants credit file that costs a few dollars can save you thousands in the long run.

“The problem is, people don’t realize that credit cards are just plastic cash,” says Chris Bender, Communications Manager for the National Foundation for Credit Counseling in the U.S.. “They think when they pay with credit cards they don’t have to pay for it quickly, and so they don’t keep track of what they spend. When you hand someone cash, it’s a psychological wake-up. ‘Why, I just gave away $40.’ When you charge something, you don’t see the money go, and in your mind that makes a difference”. With a full credit file you can see all of the future resident’s trade lines and payment histories. You’ll know if your applicant is worthy of a credit extension from you or not.

Property Managers have to qualify every applicant with thorough background check and income verification in addition the credit file. Even the most comprehensive checks cannot guarantee that 100% of residents will complete their rental agreements. In the rental industry, bad debts are inevitable and recovering this debt is essential. All landlords need to subscribe to a National Bad Debt Recovery Program. Programs that allow property managers to track bad debt collection accounts with an online collections log are even more valuable. With a full suite of application checks you can better safe guard yourself from renting to good people with too much bad debt.

The most alarming statistic: the average American carries approximately $8,400 in credit card debt. Making a minimum payment of 2 percent per month, it would take almost 31 years to pay an $8,000 balance on a card charging a 13 percent annual percentage rate. That totals near $9,100 in interest. WOW!!!

About the Author

Thank’s for reading,

Chad Gross

www.landlord2landlord.com

Landlord2Landlord is a national resident screening provider. Join our ever expanding group of members at www.landlord2landlord.com and start screenig your future residents with our online credit and criminal searches.