Unemployment and credit card debt

Americans are putting their plastic to use at record rates — the Federal Reserve reports that people have racked up $14 billion dollars in credit card debt in June alone. It’s a true sign of tough times says Gail Cunningham, Senior Director of Public Relations at the National Foundation for Credit Counseling.

Cunningham says unemployment, which is at a four-year high, is putting pressure on consumers to use credit cards: "Statistics show that when you lose your job, it typically will take you one month of job search to replace each $10,000 dollars in lost income. So if you have a $50,000 a year job, it’s going to likely take you five months to replace that job with that type of income.

"Now, during that interim, since Americans are great spenders and lousy savers, the consumer probably doesn’t have any savings to fall back on, so he lives off his credit card. He’s well-meaning — noboby intends to dig a deep financial hole — he thinks that tomorrow will be better, that new job’s right around the corner; but he’s raking up a huge debt load after losing his job and trying to keep his lifestyle going."

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