Credit card debt comes with an obvious burden: cost. Between annual fees, interest and other finance charges, a credit card can cost thousands of dollars to use in just one year.
Of course, how much you pay for credit depends on the specific rates you get, your balance and how long it takes you to pay off your debt. The smartest and most responsible card users avoid most, if not all, finance charges.
But there are other, less obvious costs associated with carrying credit card debt. Consumers often don’t realize that using credit cards can take a heavy toll on society as well, and not just in the monetary sense.
Before we discuss those societal costs, however, some context is needed. American consumers these days have much easier access to plastic. Credit access dipped sharply since the height of the Great Recession but has climbed steadily since.
As a result, America’s collective credit card tab has also grown within the same period — to the tune of $834 billion as of the fourth quarter of 2017. That figure is now just over $30 billion away from the highest total ever recorded, at the end of 2008.
According to one study, however, the expansion of credit accessibility has been a trend for decades — not just the past several years. “Many scholars argue that credit and debt has replaced income growth in a time of stagnant or declining incomes for many American families,” wrote the study’s authors.
The consequences? The authors found that more credit and debt has led to “increased vulnerability in the face of unexpected shocks such as unemployment, divorce, or illness” and “increased stress levels.”
Indeed, Americans worry a lot about their credit card debts — quite possibly on a daily basis — especially less affluent consumers who feel they must rely on credit to make ends meet. It’s therefore not surprising that money is the second most common source of stress. And the majority of those who feel stressed experience physical and psychological symptoms that lead to other problems in life such as injury or difficulties at work.
Stress — caused by financial concerns, among other sources — costs society an estimated $300 billion per year.
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