Many people may think that the so-called Great Recession that plagued the country starting in 2008 would have caused people to increase their credit card spending. As people lost their jobs, they may have needed credit cards to pay for necessary expenses. However, data has shown the opposite to be true. During the recession, consumers used their credit cards less. Consumers lost confidence and bought fewer luxury goods. Furthermore, credit card companies raised interest rates and tightened lending standards.
However, now that the economy has turned around some in New York and around the country, credit card use is on the rise once again. From December 2012 to December 2013, credit card debt rose by 1.9 percent nationwide. In December 2013 alone, credit card debt rose by $5 billion which was the largest jump in debt for a single month since May 2013.
Other types of debt including student loans and auto loans has also been on the rise as the economy has strengthened. With all these increases a record $3.1 trillion was borrowed by consumers.
While this increased borrowing may seem good to some economists, for many New Yorkers it may be a burden. Credit card debt can be difficult to pay back for many people especially when unplanned expenses sneak up on consumers. Many people may be trying to figure out a way to pay their credit card debt and avoid the harassing calls from collections.
Those who have delinquent payments should know that debt relief options are available that can help to eliminate cred card debt. Debt reduction methods, including bankruptcy, can help consumers get on track following financial challenges. These legitimate legal tools can give consumers a fresh start for this new economy.
Source: Observer-Reporter, “US consumers boost borrowing by $18.8B in December,” Feb. 7, 2014