The United States under Obama is just turning the corner as far as recession is concerned.
But one factor that had contributed to some extant to the recession and financial crisis is the credit card debt in the USA.
In terms of figures the credit cards in circulation are over 1.
5 billion for a population of just over 300 million.
This is a menacing ratio and translates to a credit card debt of over 600 billion.
To this figure if we add the almost million bankruptcies in the United Sates than we can get an idea of how much the United States economy is affected.
America is presently the world's largest economy though in the near future China may well over take it.
But unlike in China in the United States 60 million households do not pay their outstanding balances in full.
This are carried forward and classified as unsecured debt.
This debt because of the low rate of clearance say 2-4% of the outstanding has resulted in a big economic problem resulting in a huge liability to a lot of people.
The reason for this debt is not hard to seek and has its genesis in the easy availability of credit and secondly the ease by which gambling on the net with credit cards can be affected.
At a conservative estimate nearly 3 million Americans could be addicted to gambling.
Bear in mind that the cumulative United states national debt is hovering around 5.
7 trillion.
This is far exceeded by the total consumer debt of $6.
5 trillion and one can imagine what this means.
It really spells a very difficult financial situation bordering on a catastrophe.
The situation is compounded with an abysmally low saving rate of the American populace which presently is almost zero.
In case one compares this with the saving rate in the eighties when it was around 8.
5% then the magnitude of the problem can be understood.
The period of the late 90s of the last century saw immense prosperity for the people.
But this was also the period when debt grew because of easy availability of credit.
Thus In the period 1989-2001 the debt almost tripled from $ 238 billion to $692 billion.
The savings rate declined and bankruptcies rose up by 125% This massive credit card debt has had a negative effect on the economy.
In addition mounting mortgage and consumer debt is crippling the budget of most households.
Large bankruptcies have set in like Lehman brothers and GM.
The deregulation of Banking has also taken its toll as the real cost of corporate credit (prime rate) has increased only marginally (2.
5%-3.
0%) yet the real cost of consumer credit card debt has doubled from less than 6% to over 11%.
Revolving of credit card debt to the next cycle amounts to nearly $11,000 per household.
To sum up, as things stand the vast US economy may in the years to come buckle downwards if the credit card debt is not reined in.