What's in your wallet? Debt.*

 

In 2013, the average credit card interest rate was 13%, and anything above 19.9% was a sign that you had run into trouble paying bills and had a poor credit rating.  Today, the AVERAGE credit card interest rate is 26%- exactly double the average rate in 2013.  What happened?

It turns out that Capital One Bank is the main culprit.  In 2016, the world's largest extender of unsecured credit decided to experiment with higher interest rates, gradually raising interest on balances from 13% to 17% to 19% over the course of five years while also investing in glitzy commercials featuring actors, comedians and sports figures pimping the benefits of "cash back rewards," with a special emphasis on the use of credit to small business owners.  

The result?  Use of credit cards exploded even as the cost of using those cards rose.  Capital One had it's answer:  Americans like to spend, can easily be convinced that spending is a positive activity and even analogous to investment, getting one percent "cash back" is worth any amount of spending, and interest rates are basically meaningless.

It didn't hurt that wages continued to remain stagnant when matched up against inflation during the period 2013-present.  To continue to purchase the same thing year after year, more and more people must rely on unsecured loans from banks like Capital One.  And it's so easy- no conversations with judgmental people at the bank, not even a phone call.  Just take out that piece of plastic and you've got your gasoline, groceries or whatever else you want.

Today American adults carry an average of $7200 in credit card debt, $1.17 trillion in all, and that number is going up every quarter.  Much of that debt is on credit cards carrying interest rates of over 30%.  The entire economy is built on this debt- money that is PROJECTED to arrive through electronic transfer to Capital One and other banks- and on this debt GROWING every single year.  Every new product is presented to the public in the hopes that consumers are willing to go into a LITTLE MORE debt in order to possess it.  Which makes advertising more aggressive every single year- aggressive and expensive (you think these celebrities do these ads for free?) 

All of which keeps me busy with this blog.  Which is something, I guess.

*oh, and Fake Status.  Access to over 1300 Airport Lounges?  Who gives a damn?