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Debt Stress and Other Credit Card Gems

posted by Bob Lawless

On June 9, the Associated Press and AOL released a poll describing an increase in self-reported stress by Americans struggling with debt. According to a Debt Stress Index that compiled the poll results, 43% of respondents scored in the moderate to high range as compared to 32% from a comparable survey at the end of 2004. Blog posts and news stories summarizing the results can be found in many places including here (WebMD), here (AOL), and here (MSNBC, a good summary).

The link between high consumer debt and physical problems has been well known, albeit not as well publicized as it should be. For example, this most recent poll finds 44% of persons reporting high debt stress also reported migraines or other headaches as compared to 15% of the other respondents. Also, persons reporting high debt stress reported heart attacks at double the rate of persons reporting low debt stress.

Beyond these very important health issues, Credit Slips readers will want to take a look at the answers to the general financial questions in the survey. These questions focus principally on credit card usage and payment patterns. Despite a reported increase in the levels of debt-induced stress since 2004, there are smaller differences in how persons are reporting they are using their credit cards. In 2008, 63% of respondents reporting using a credit card in the past month as compared to 57% in 2004. (That figure seems very low--can it possibly be right?) As far as carrying a monthly balance, 37% report doing so as compared to 34% in 2004. The biggest change seems to be in the amount of persons carrying high amounts credit card debt with 32% now reporting carrying a balance of $3,000 or more as compared to 25% in 2004. Even accounting for inflation, that represents a real increase.

How to reconcile the higher levels of debt-induced stress with only small changes in payment patterns? I think there probably are two factors. First, we would expect the persons with high credit card balances to be most likely to report increased levels of stress, and we do see a substantial increase in persons reporting carrying high card balances. Second, the AP/AOL survey ask about debt-induced stress generally but mainly focused on credit-card debt in its questions about payment patterns and debt levels. The mortgage foreclosure crisis undoubtedly has contributed substantially to the increase in debt stress levels.

Like Elizabeth Warren's recent post on how foreclosure is affecting families, the AP/AOL survey is another reminder to the credit regulatory community that consumer credit issues go beyond our nation's economic health and affect many parts of our lives.

Comments

Collections. The debt collector that inflicts the most emotional distress usually is the one that gets paid first. In re: Zachary S. Feldmeier No. 304-30583-TMB7,the Bankruptcy Judge awarded “emotional distress” damages (very hard to get in Bk) for violation of the Discharge Injunction. Quoting from the case: “Lenahan’s conduct in threatening to bring criminal charges by a “prosecuting attorney” against Ms. Feldmeier, coupled with the fact that it left the threatening message with a third party, Mr. Feldmeier’s mother, was egregious conduct. Moreover, I find that a “reasonable person” would suffer significant emotional harm from this conduct”. The Feldmeiers’ received “emotional distress” damages even though they did not provide medical evidence for reasons stated above.
The closer they come to that invisible line of egregious debt collecting as defined in the FDCPA the more likely the debtor will suffer from some sort of emotional distress. Even is they stay below the “line” it still creates distress. It’s their M.O.

Anyone who has a conscience and owes a great of money will have stress headaches! If a person owes a great deal and it doesn't matter to the person, the debt remains high without health consequence. Only when credit card companies quit ad campaigns like "I want it all, I want it all, I want it all, and I want it now!" will people come to their senses -- we can't spend more than we earn. Thus, no unscrupulous collector calls, no migraine headaches, no emotional distress, no bother.

yes today it is difficult to maintain the credit cards because more duplicate cards are in market
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Credit Card Debt

Credit card debt is a problem for many people and is a major contributor to personal debt. Funding your lifestyle with a credit card is easy but the hard part is paying it off and clearing the debt.

Credit card debt is a problem for many people and is a major contributor to personal debt. Funding your lifestyle with a credit card is easy but the hard part is paying it off and clearing the debt.

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