According to the Federal Reserve, credit card debt is currently soaring. Does this mean it is simply too easy for people to obtain credit? Credit makes it easy for consumers to overspend as patrons are not required to pay for their items immediately. Here are some of the common ways people obtain credit cards, and how these practices are hurting or helping the economy.

Mail Offers

How often do you see mail offers come to your home? These mail offers are “pre-screened” credit card applications. All a person needs to do is fill out the form, go online, or call the 800 number to become approved for a credit card. Based on your credit history, the company will in turn offer you a line of credit. Many of these credit cards will start out with 0% interest rate offers, and increase after a certain amount of time. While not all applicants are approved, the majority are given at least a $500 line of credit. This process makes it far too easy for individuals without the right financial stability to obtain a credit card.

Online Offers

Emails are often sent out claiming that individuals are pre-approved for a credit card. Filling out an online application can give a person approval information within seconds. By having credit approval at the click of a button, individuals can quickly accrue debt that they are unable to pay.

Credit Card Risks

Each time a credit card is used, the individual is borrowing money from the bank. If the money is not paid back in full at the end of the month, there will be an interest rate and other fees attached to the next payment. The “buy now, pay later” mentality can hurt many Americans into thinking they can afford things that are far outside their spending limit. The Federal Reserve estimates that the average American household has at least 4 major credit cards, and several smaller retail store credit cards. A credit card can be useful in some situations, but it can be harmful if not managed correctly. Some of the common risks include:

Yearly fees

These two items can make it difficult for a borrower to repay their debt. If you are carrying more than $5,000 on a credit card with an interest rate of 14% or more, it can take over 30 years to pay back the debt. Banks are now required to show consumers the amount of time it will take to pay off a credit card based on the minimum amount due, and a higher amount to pay off the card in 3 years. It is important to pay attention to this box as it can help you to create a debt payoff plan.

Obtaining Credit

While it can be easy to obtain credit, there are some banks taking a stance against consumers that have a history of bad credit. Obtaining credit cards after bankruptcy can be challenging unless you decide to choose a secured credit card. There are other things you can do such as asking another person to co-sign on your credit card loan. These processes are meant to help people learn how to restore their credit rating. However, some people simple fall back into old habits and quickly accrue credit card debt.

Consumers must understand how to manage their debt, and understand how interest rates can change their ability to pay off debt.


Kenneth Frederickson writes on finance, money management, the stock market, credit cards, economics, investment advice and other related topics; those curious about the various options which exist in the credit card market should consider viewing the resources at