Fed Casts Doubt on Link between Credit Card Debt and Bankruptcy

While circumstantial evidence may lead one to think that all one needs is a pulse and a mailing address to get credit card offers ? the Fed would like to disavow you of that. In a story running in the Salt Lake Tribune, the Federal Reserve issued a report downplaying assertions that the banking industry contributed to bankruptcies by offering credit cards to customers who may be unable to repay the debt.

According to the Fed, credit-card issuers do not solicit customers or extend credit to them without assessing their ability to repay debt. No, really. Forget the hundreds of credit offers mailed out like so much confetti. Forget the offers clogging inboxes across the land. In the Fed?s world of delicious, those don?t exist. And no one out there is preying on unsuspecting consumers.

“Despite the large expansion in the proportion of households with credit cards in recent decades, measures of debt repayments relative to income show no signs of a rise in distress in the aggregate,” the Fed?s report stated in response to the question of whether industry practices encourage consumers to accumulate debt, how issuers determine whether a consumer will repay the debt, and how they solicit and select customers.

You can read the entire article at Fed casts doubt on link between credit-card debt and bankruptcy.