Accuplacer Practice Test

What is the primary cause of the rise in personal debt mentioned in the passage?

1. Decrease in available credit.

2. Decrease in consumer spending.

3. Aggressive marketing and tactics by credit card companies.

4. Government regulations.

The correct answer is: Decrease in consumer spending.

The primary cause of the rise in personal debt is linked to aggressive marketing and tactics by credit card companies. These companies employ various strategies to entice consumers to use their products, which can lead to increased spending beyond one's means. This often involves promotional offers that encourage buying now and paying later, alongside high credit limits that may lead individuals to accumulate more debt than they can repay. While options related to changes in available credit, consumer spending, or government regulations are all significant factors in the broader context of personal finance, the rise in personal debt specifically emphasizes the proactive measures taken by credit card companies to promote borrowing. They create an environment where consumers feel compelled to spend more, contributing directly to the accumulation of debt. Therefore, the tactics employed by these companies are a crucial aspect of understanding the reasons behind increased personal borrowing trends.