A recent report showing an increase in average credit card debt has economists worried.
Probably the only good thing that one could say about the Great Recession is that it forced people to carry less credit card debt. This type of debt can be especially troublesome for many people due to high interest rates that card issuers charge, which can eventually cause many to experience lawsuits, collection calls, wage garnishment and eventually bankruptcy. After declining for many years, credit card debt among American households has been increasing recently as the economy improves, according to a recent report.
The average American household began taking on more debt during the fourth quarter of 2013. However, since most of this debt was mortgages and car loans, financial experts saw no reason to worry, as it presented a more positive economic outlook.
According to recent data, unfortunately, credit card debt has been rising with other forms of debt recently. A report by CardHub.com indicated that Americans paid off $32.5 billion in credit card debt during the first quarter of this year. However, by the second quarter, they had racked up $28.2 billion in new credit card charges, which is the biggest jump since the recession.
During the second quarter of this year, the average credit card debt for each American household increased from $6,682 to $6,802. It is expected that this amount will increase to $7,000 by the end of the year.
Although it would seem at first glance that there is nothing dramatic about these increases, economists say that they have reason to worry. According to experts, the average household carried $8,400 in credit card debt when the recession began. At this point, many began defaulting on their financial obligations. Since the average credit card debt is becoming dangerously close to this figure, experts worry that more households will soon encounter financial trouble.
Keeping debt down during the holidays
These economic worries are exacerbated by the approaching holiday season, when Americans tend to spend more. Last year, Americans spent an average of $730 for holiday gifts, decorations and other items. This year, with a stronger economy, it is expected that many will be tempted to spend more.
Since it is easy to get caught up in the moment during this time of year, financial experts offer the following tips to avoid finding yourself overextended financially:
• Figure out how much money you can spend without going into debt and spend no more than this amount.
• Make a list of everyone that you need to buy gifts for.
• Set a limit on how much you spend for each person, making sure the total amount is within your budget.
• Be careful about where and when you shop-prices fluctuate greatly from store to store and can drop dramatically as Christmas approaches.
If you follow these tips, you can avoid having to pay for your holiday purchases well into the new year.
If you are in a situation where the amount of credit card debt you carry is more than you can reasonably expect to pay off, it is a good idea to speak to an experienced bankruptcy attorney. Filing bankruptcy may be the best way of dealing with your debt. An attorney can examine your situation, inform you of your bankruptcy and bankruptcy alternatives, and advise you of the best way to regain financial solvency.