U.S. Consumers Rack Up More Credit Card Debt
Americans continue to pull out their charge card to make all sorts of purchases. As reported by MSN, credit card debt exploded in July 2019, increasing double digits. Total consumer credit is now much higher than it was at the start of the Great Recession.
But should consumers be worried? Every person’s case is unique, and you can only determine the maximum about of debt you can service by looking at your own finances. However, if you find yourself slipping behind on payments, or if you are foregoing the purchase of necessities like medicine to pay a credit card, you should meet with a South Florida attorney to discuss possible bankruptcy.
Revolving Credit Increases—But Why?
According to government statistics contained in the MSN article, revolving credit increased by 11.25% on an annualized basis in July. Credit cards make up the vast majority of revolving credit. Experts mentioned that this type of growth is usually seen only during the holidays and not during the summer.
What explains the big jump? For one thing, the jump might not be that high. The 11.25% figure is an annualized rate. Also, summer vacations are a big expense that many families might have put on a credit card with the expectation of paying off the balance over the next few months.
Although the media reports are rife with predictions that the U.S. is slipping into a recession, the jobs market remains strong. Consumer confidence is also at a high level. Without other information, it’s premature to claim that consumers are paying for necessities with their credit cards because of financial distress. Instead, they could be splurging because they are feeling confident.
Defaults Remain Low
If the economy were struggling, we would expect defaults to be rising. However, delinquencies and defaults stand at historically low levels. These are additional data points that consumer debt isn’t a problem.
One reason why rising consumer debt might not be a problem is that incomes have risen along with the debt load. Indeed, statistics from the St. Louis Federal Reserve show that the percentage of household disposable income that goes to debt service is lower than at other points in the past decade, and is certainly much lower than the percentages right before the last recession.
Also, the MSN article neglected to mention the U.S. savings rate, which has been impressive. Should consumers run into trouble, they have more money saved to pay their bills. There are very few indicators pointing to consumers taking on piles of debt because of financial distress, so they should not be driving the economy into the ditch any time soon.
Are You Feeling Financial Distress? Call Us Today
Government statistics only point out general trends, and there are, of course, exceptions. Everyone experiences the economy differently. If you have suffered job loss or sudden medical expenses, you might want to consider bankruptcy, which can give you the breathing room needed to start fresh.
Contact the Plantation bankruptcy lawyers at Nowack & Olson today at 888-813-4737 to schedule a free consultation.