>
> Matt writes;
>
> …But as far as credit card debt, I think that
> the negative reporting may be overblown by
> debt doomsday types. Ive always suspected
> so, and may finally have found the proof in a
> column I read by Gene Epstein in Barrons back
> in October. Excerpt: “…But according to a
> source at CreditCards.com, approximately
> $400 billion of the nearly $1 trillion in
> outstanding credit- card debt is paid down
> completely each month, essentially used as a
> short-term interest-free loan. More than $500
> billion of the rest is owed by users who pay
> somewhere between the full amount and the
> minimum due. Only about 6% of the total is
> owed by customers who pay only the
> minimum.”
>
> The $500B he identifies as carry over debt is
> the real credit card debt (to me), and is
> equivalent to about only 6 weeks of US retail
> sales. It also probably includes much business
> wholesale trade as many businesses are using
> AMEX Corp Card and VISA Business for small
> purchasing nowadays, often for the “rewards”
> programs.
>
> I think the government and media reports on
> credit card debt are only taking a snapshot of
> balances at a given time in a month, and as
> monthly closing dates on the cards can vary
> from one cardholder to another, and the cards
> are continuously used throughout the month,
> the number looks larger ($900B) than what I
> think they are trying to track, which I think is
> the $500B amount (true credit card “debt”).
> $500B is about $1650 per capita. I dont think
> this will be a much of a drag for the US
> economy.
>
> Perhaps this perspective will give you some
> hope that the large stimulus package is going
> to help improve the economy this year.
>
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