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Average Consumer Debt
Pinnacle Digest writes: In 1966, George Mitchell of the Federal Reserve warned against using computers to transfer money, either from consumer to retailer or from bank to bank. In the 1990s, when the use of debit and credit cards really took off, digital money transfers became a phenomenon. With this phenomenon came soaring levels of personal debt the United States had never known before.
The writer, Rick Mills, reminds us of the psychological reaction which is absent when paying with either a credit or debit card (in comparison to cash). Studies have shown there is a sensory glee caused by impulse buying that can cause otherwise rational people to buy things they never would if they had to pay with cash.
Although the average personal debt in America has declined in the past 2 years, falling indebtedness is due largely to defaults rather than repayments.
The national average credit card default rate as of January 2012 stood at a shocking 28.6%. This is up from 27.9% two years ago. Rick delves into the vast psyche of the American public and their utter lack of financial education.
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