Europe Likes Credit Cards Too

The United States has long been portrayed as a kingdom of debt. Its people like to live beyond their means, whether that's through mortgages they can't afford or credit cards run up to the limit. At least that's the common wisdom. The Financial Times, however, reports that things aren't a whole lot better across the pond. Their credit card defaults are also rising and Great Britain's debt to income ratio is actually higher than that of the U.S.

Here's what the FT says about credit card defaults:

Lenders in Europe bracing themselves for a rising wave of consumer debt defaults as the credit card crisis that has caused billions of dollars in losses among US banks spreads across the Atlantic.

The International Monetary Fund estimates that of US consumer debt totalling $1,914bn, about 14 per cent will turn sour.

It expects that 7 per cent of the $2,467bn of consumer debt in Europe will be lost, with much of that falling in the UK, the continent's biggest nation of credit card borrowers.

Admittedly, the U.S. still looks worse, with its default percentage double what's expected in Europe. But when it comes to overall household debt, Great Britain, shockingly, looks worse than the U.S. Here's a chart from a different FT piece:

Debt UK US.gif

Both nations are clearly moving in the wrong direction. But at least this chart provides a small consolation for Americans: they are not alone.