Impact of Credit Card Use on Consumer Bankruptcies
Impact of Credit Card Use on Consumer Bankruptcies
The numbers demonstrate that the receivables and filings have been rising almost in tandem. The magnitude of the rise has been greater for credit card debt than for the bankruptcy filings. Consumer bankruptcies have more than doubled from 449,129 in 1986 to 1,125,006 in l996, while credit card debt has increased five-fold from $82 billion in 1986 to $413.4 billion in 1996.
More than one-half of the increase in consumer bankruptcies since l986 occurred in l996 and l997. This recent rapid rise may be explained not only by the escalation of credit card debt in the preceding years but also by the fact that in l995 credit card companies made a record 2.7 billion direct mail solicitations.1 Moreover in l996, there were 2.4 billion credit card mail solicitations.2 Also from l995 to l996, credit card industry telemarketing expenses rose 30 percent from 18.6 to 24.1 million hours.3 The credit card companies have been
saturating the public with their aggressive marketing tactics as they engage in a fierce competitive struggle for market share.
Year | Credit Card Receivables U.S. Year-End In Billions Of Dollars4 | Percent Increase Over Prior Year | Total Consumer Bankruptcy Filings5 | Percent Increase (Decrease) Over Prior Year |
---|---|---|---|---|
1986 1987 1988 1989 1990 1991 1992 1992 1994 1995 1996 |
82.0 101.0 122.8 146.5 172.6 188.6 201.7 241.2 287.5 360.4 413.3 |
17.8 23.2 21.6 19.3 17.8 9.2 6.9 19.6 19.2 25.3 14.7 |
449,129 492,850 549,831 616,753 718,107 872,438 900,874 812,898 780,455 874,642 1,125,006 |
31.6 9.73 11.6 12.2 16.4 21.2 3.26 (9.77) (3.99) 12.1 28.6 |
(Calendar-Year 1997 Figures Are Not Yet Available.)
Footnotes
1American Bankruptcy Law Journal Spring 1997, p. 264, "Credit Card Defaults, Credit Card Profits, and Bankruptcy" by Professor Lawrence M. Ausubel. [Return to Text]
2National Bankruptcy Review Commission Report, Preface page v. [Return to Text]
3"Expanding Credit Card Debt: The Role of Creditors and the Impact on Consumers" Consumer Federation of America report and press release, December 16, 1997. [Return to Text]
4Source - Credit Card News-Credit Card Issuer’s Guide Annual Statistical Abstract for l997. Receivables are only those of Visa, MasterCard, American Express and Discover, and are on a calendar-year basis. [Return to Text]
5Source - Administrative Office of U.S. Courts; 1997 Bankruptcy Yearbook & Almanac. [Return to Text]