Credit card debt rises as Americans fall into 'asset poverty'

09.24.09
By James Conroy

It seems that the recession has taken a toll on most Americans, who are facing credit card debt and falling into "asset poverty."

That's the assessment of the Corporation for Enterprise Development (CFED) which used information from a variety of sources to compile its 2009-2010 Assets & Opportunity Scorecard. The results showed that a growing number of households are what the organization calls asset poor - meaning the household "lacks the resources to subsist at the poverty level for three
months if it loses its source of income."

According to the group, 22.5 percent of American households can be considered asset poor. For minority groups the problem is even more severe as CFED finds 37.2 percent of minority households are considered to be in asset poverty - more than twice the number of whites (16.4 percent).

Not helping matters is the increasing amount of credit card debt facing consumers. According to the numbers CFED obtained from TransUnion, median credit card debt per borrower in the U.S. reached $2,960 in 2008 - a 64 percent increase over the numbers from 2006.

Alaska residents rank highest on the credit card debt list with a median debt of $4,755 last year. Other Western states followed suit as Nevada, Arizona and Washington rounded out the top four states on the list.

While Idaho ranked 13th on the list in terms of median credit card debt, the state saw the highest increase in the nation since 2006 with credit card debt skyrocketing 96.3 percent over that time. Mississippi and West Virginia residents also had their credit card debt rise more than 90 percent over the two years.

Recent figures from the Federal Reserve indicate that credit card debt might soon be on the way down. According to the Fed, revolving credit - much of which consists of credit card debt - fell 8 percent in July after a 6.4 percent drop in June.

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Almost a quarter of American households are what CFED calls asset poor