Many people in credit crisis

The old year is ending with too many Americans in a credit card “hangover.”

Delinquencies and defaults in credit card payments are surging, according to a recent Associated Press analysis of financial data from the country’s largest credit card issuers, released Dec. 24.

The Federal Reserve estimates that Americans now owe just shy of a trillion dollars in credit card debt — a reported $920 billion.

Christmas 2007 is expected to only add fuel to a raging inferno.

“I stay away from them,” Annette Combs of Whipple, said of credit cards. “I’ve got my bank card that takes out of my checking, but that’s all. I learned from other people that you can get into trouble with credit cards.”

The AP study found that the greatest rise was among accounts more than 90 days in arrears. Deterioration of finances of many households is partly a byproduct of the subprime mortgage crisis, the analysis found.

The new data represents about 325 million individual accounts held in trusts created by credit card issuers in order to sell the debt to investors – similar to how many banks packaged and sold subprime mortgage loans. Together, they represent about 45 percent of the $920 billion the Fed counts as credit card debt owed by Americans.

Until recently, credit card default rates had been running close to record lows, providing one of the few profit growth areas for the nation’s banks, which continue to flood America’s mailboxes with monthly offers of easy sign-ups for new plastic.

Combs, who is in her 30s, said she and her husband get credit card offers in the mail every single week. She’s tired of it.

“I rip them up and throw them in the trash,” she said.

Unlike the majority of Americans, this couple used cash — not credit — for their Christmas shopping.

There will be no fear of bills in January.

Credit card debt eventually leaks into other areas, whether it begins with the mortgage and goes to the credit card or vice versa, experts say.

“One of the big problems today is also the high cost of gasoline, other utilities, mortgages, on top of the very substantial amount of interest charged by credit card companies,” said Pete Gammon, 46, of Gammon Financial, 200 Putnam St. “Late fees on credit card debt is outrageous.”

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