ROANOKE TIMES
Copyright (c) 1997, Roanoke Times
DATE: Wednesday, March 12, 1997 TAG: 9703120075
SECTION: BUSINESS PAGE: B-6 EDITION: METRO
SOURCE: ASSOCIATED PRESS
NEW YORK
A MasterCard consultant says unsettling statistics don't reflect changes in the way people use credit cards
The average consumer is in good financial health, with household assets far outstripping debt increases in recent years, according to a recent study commissioned by MasterCard International.
Lawrence Chimerine, chief economist at the Economic Strategy Institute and a MasterCard consultant, said economic statistics ``exaggerate and distort'' the level of consumer debt by failing to take into account major changes in the way people use credit cards.
The MasterCard study was an attempt to fend off criticism of the credit card industry for extending unsafe loans and making it too easy for consumers to take on debt.
Concern has been expressed by members of Congress and even consumers that American families are going too far into debt. They fear the high debt levels inevitably will slow the economy and lead to a recession.
These conclusions have been drawn as credit-card issuers write off record levels of loans, consumers are paying out a higher percentage of disposable income to cover debt service, and personal bankruptcies have risen to unprecedented levels.
But Chimerine said the alarm has been sounded because the government and other experts aren't measuring debt burdens properly. ``No way can you argue that consumers are in bad shape or have too much debt,'' he said.
Much of the overstatement of debt can be explained, he said.
For example, some consumers charge more often than they used to, to get mileage points on airlines and other awards now available.
More consumers charge everyday items such as food, but then pay off the card balance at the end of the month rather than take on long-term debt to meet operating expenses. In Chimerine's view, those charges shouldn't be counted as part of the household's debt burden.
Some use credit cards to pay mortgages, a trend that reflects an increase in home ownership and rising real estate values, both of which have added to household wealth.
LENGTH: Short : 48 linesby CNB