In the wake of the economic recession, Americans guarded their pocket books closely and shied away from using credit cards for purchases. However, according to a recent report on consumer spending from the Federal Reserve, Americans are once again racking up debt.
The Federal Reserve report indicated that in April consumer credit had increased to $3.18 trillion, which was a $26.85 billion increase over the month prior. This high number shocked some analysts who were surprised to find that consumer debt is now increasing at a 10.2 percent annual rate.
The data also showed that consumer credit card debt is increasing at an even higher rate of 12.3 percent annually. In fact, April saw nearly a $9 billion increase in consumer credit card debt.
While increased consumer spending and credit card debt may seem like indications of a healthy economy, experts caution that the scenario does come with negative repercussions.
Borrowers will eventually have to pay back the debt they owe plus a hefty interest. This means consumers will have less money to put back into the economy because instead it goes to credit card companies.
In order to prevent getting in over your head with credit card debt in the first place, personal finance experts advise that credit cards should not be used like loans. That means balances should not be carried over from month-to-month, resulting in huge interest charges.
Of course, it’s often not possible for individuals to pay off their credit card bills each month, especially after an emergency or another unexpected major expense. In these situations, debt can spiral out of control, and our firm is there to help when it does.
When debt from credit cards and other sources becomes too much for a personal to handle, there are several options that can be considered.
One option is to file for bankruptcy, but there are also several alternatives to bankruptcy including debt settlement, debt negotiation and for Wisconsin residents, Chapter 128 reorganization. For more information, please visit our Milwaukee Bankruptcy Attorneys website.
Source: SavingAdvice.com, “Americans Love Debt Again: Consumer Credit Card Spending Surges by $8.8 Billion,” Jeffery Strain, June 7, 2014