When it comes to the record growth of consumer debt, many questions come to mind. What do we know? What can history teach us? What should a credit union do to keep their members safe? According to Federal Reserve data, total U.S. credit card debt has reached $1 trillion, surpassing a previous mark set in April of 2008 just before the Great Recession. For households that carry credit card debt, the average amount per household is now $9,600, which equals 17 percent of an average U.S. household income. The average interest rate on a credit card is 16 percent, and about 24 percent for those with subpar credit, that debt grows between $1,600 and $2,300 each year. Yet, despite growing household debt at potentially increasing interest rates, most Americans appear to be optimistic about the future due to the stable economy and low unemployment. Unfortunately, all it takes is one major set-back in the way of a job loss or major medical situation to turn the tide and create problems for consumers with high credit card debt.
What opportunity does this pose to credit unions?
Education, financial literacy and debt management is paramount and credit unions are perfectly positioned to provide this to their members. While it is important to continually offer guidance about how to use credit cards, credit unions can make a bigger impact for their members by taking a more member-centric approach. By offering a parachute for members in times of hardship, credit unions will create a huge differentiation in the marketplace.continue reading »