Have you run up your credit card on a shopping spree, now feeling the squeeze because you can’t pay the minimum balance? It’s all the economy’s fault, according to the December 26 “NBC Nightly News.”
NBC senior investigative correspondent Lisa Myers reported on mounting credit card debt, but presented borrowers as victims of credit card companies and a struggling economy.
Why have American households accumulated almost $10,000 in credit card debt on average – 64 percent more than a decade ago? And why have “seriously delinquent” accounts – late at least 90 days – increased 50 percent over a year ago along with an 18-percent increase in defaults?
According to Myers, “Experts blame fallout from the subprime mortgage crisis and increased unemployment and warn of broader economic consequences.”
“Increased unemployment”? Unemployment has risen only 0.3 percent since March and is still relatively low, at 4.7 percent for November, according to USA Today.
The December 17 Wall Street Journal had a different take. WSJ reporter Sudeep Reddy pointed out that although unemployment has increased slightly, a rise in layoffs that would signal an economic slowdown or recession – one that might cause credit card delinquencies to soar – has not occurred.
“The job market is signaling a modest slowdown in hiring but not a sharp increase in layoffs,” Reddy wrote. “While jobs continue to bleed from the housing and finance sectors, growth in service jobs remains robust and most other sectors remain afloat.”
“Nightly News” didn’t accuse borrowers of irresponsible spending, but it did fault lenders for raising interest rates in cases where risk is considered higher, because borrowers are unable to make payments on other debt.
“Once consumers get into a hole, lenders – credit card companies included – will slap on fees and have other policies that just dig the consumer in deeper and deeper,” Kathleen Day, from the Center for Responsible Lending, told “Nightly News.”
No lenders were represented in the NBC report, and the borrower interviewed was treated as a victim of circumstance.