Consumer Credit Counseling

Credit card debt is an example of unsecured consumer debt, accessed through credit cards.

Debt results when a client of a credit card company purchases an item or service through the card system. Debt accumulates and increases via interest and penalties when the consumer does not pay the company for the money he or she has spent.

The results of not paying this debt on time are that the company will charge a late payment penalty (generally in the US from $10 to $40) and report the late payment to credit rating agencies. The increase in late fees and penalties can increase the overall average credit card debt in America. Being late on a payment is sometimes referred to as being in "default". The late payment penalty itself increases the amount of debt the consumer has.

When a consumer has been late on a payment, it is possible that other creditors, even creditors the consumer was not late in paying, may increase the interest rates the consumer is paying. This practice is called universal default.

Average Credit card debt statistics
• United States (July 2008) $962 billion
• United Kingdom (March 2009) £64.7 billion
• Australia (2007) $41 billion (AUD)

The average credit card debt is said to be higher in industrialized countries. The average U.S. college graduate begins his or her post-college days with more than $2,000 in average credit card debt. The median average credit card debt in America is $3,000 and number of cards held is two.

Relieving credit card debt
Account holders can request a reduction in their annual percentage rate (APR). A survey conducted by the U.S. Public Interest Research Group in March 2002 found that among its fifty participants, including people of all credit backgrounds, who contacted their credit card issuers, 56 percent received a lower APR. On average the percentage went from 16 percent to 10.47 percent.

Bankruptcy concerns
Sometimes the late fees, high annual percentage rates (APRs), and universal default overcome consumers.