Americans’ credit card debt on the rise again
Are you using your credit card account as a safety net to protect you from overdrawing your bank account — or to allow you to purchase things you can’t afford on your regular paycheck? If so, you’re not alone. Millions of other Florida residents are spending more with their credit cards, according to a recent CardHub.com study. Cards are convenient and can help you raise your credit score, but there are also serious drawbacks to having too much credit card debt.
During the Great Recession, consumers across the country cut back on their credit card spending, says CardHub.com. Now that financial challenges are starting to improve for many people, they may feel a little better about charging more. Financial experts predict Americans will charge nearly $47 billion in new debt from credit cards by the end of 2013; they say the total amount of credit card debt from 2011 through the end of this year may be up to $130 billion.
Many people pay down their debt in the first few months of the year through tax returns and year-end bonuses. This is a great way to ease your financial burden and keep you from the stressful problem of creditor harassment, especially if you have delinquent payments. However, paying down consumer debt only works in the long run if you avoid over-spending the rest of the year. So far, Americans have paid down seven percent less this year than in the first three months of 2012.
In 2011, consumers paid down about $32.7 billion, but charged it back again and added $46.71 billion. Financial experts are saying this year could be a repeat of two years ago. Credit cards aren’t necessarily a bad thing to have, but wisdom and discretion must be used to keep from getting in over your head.
Source: Sun Sentinel, “A bad old habit returning: More credit card debt,” Donna Gehrke-White, June 12, 2013