Delinquent credit card debt is a serious and rising problem in the United States. The average American household had just over $16,000 in credit card debt at the end of 2016, the second highest in year since 2002. Nearly 2% of all credit card debt was more than 60 days past due. These are sobering statistics that affect the livelihood of a great deal of individuals and families and in turn affect the type of world that we all live in. One question that can be asked is, what can be done to reverse the trend, and provide relief to those who are incurring incredibly high interest rates?
The causes of delinquency are varied and complex, however, for the purposes of this discussion, let’s assume that there are two major causes: those who choose not to pay and those who are unable to pay. The former being defined as those who are able financially to repay their debt, but irresponsible with their assets and/or management of those assets. The latter being those who do not have the capability financially to meet their obligations, but would willingly do so if able. The rate of delinquency for those under age 35 is almost double that for the age of those over 35.
At the same time, our country faces political strife where one faction believes that the government should help those in need and one believes that it is responsibility of those who got into trouble to get themselves out. Both sides are correct. However, a solution exists that can assist both those who are irresponsible and those without the funds while maintaining a happy medium between help and responsibility.
Volunteerism has shown a steady increase in this country. Studies have shown, for decades, that an increase in giving to others promotes responsibility of one’s own actions. The very age group that shows the highest delinquency rates also has the lowest rates for volunteerism. The solution then is simple: credit card companies should work with local charities and non-profits to have those with delinquent debt serve as volunteers as a way of repaying their debt. This will help both kinds of non-paying customers. The willfully negligent will learn responsibility either by giving of their time or by paying their balance post haste. The customers who are unable to pay, especially those who may have lost their job which caused the situation in the first place, can work to reduce the balance owed.
For those who would willingly pay if they could, this solution offers an ever greater benefit. Volunteering raises self-respect. It can provide training for new skills, adding to the resume of volunteers to help them find more gainful employment, thus adding to their ability to repay. A well done volunteer assignment can also provide useful contacts and references for gainful employment. Lastly, by working to keep the delinquency in check, consumers can also protect their credit rating, which can also make a substantial difference in future employment opportunities.
The credit card companies can benefit by this arrangement as well. While it would take some changes to current regulations to be legal, the practice of writing off the debt as a charitable contribution could be accomplished. Consumers are more likely to show brand loyalty to a company that helped them through a rough spot, which is a long-term advantage. Along with these solutions there is an added benefit. All of these solutions can be seen as preventative measures in order to help a situation from repeating itself thus allowing for the betterment of the group as a whole.
Non-profit organizations would see an increase in volunteerism like never before and it would be from the very demographic that they usually do not have the privilege of hearing from. In addition, one of the most needed skills that non-profit organizations seek is computer and technology skills. The under 35 crowd has those very skills that are missing in most of the current volunteers. It would be the hope then that those who, having once experienced the joy of giving of themselves, would continue the practice even when not being forced to by circumstance. Or at the very least, impart some of their wisdom and skills on the organization and volunteers before leaving.
This proposed solution is not a one-size-fits-all for delinquent credit card debt, however, there are sufficient benefits to be had for all involved. Delinquency would be reduced and the crushing circle of late-payment and increased interest rates would be broken. The side benefits could be astronomical to the consumer, charities, and credit card companies, as well an improved economic outlook overall.