There are some indicators that the United States economy has stabilized and is now on the upswing, and one of them is that consumer credit debt levels have risen. While this can have a positive effect on a national scale, it can also be a sign that Americans still haven’t learned their lessons regarding indebtedness.
Last year, according to statistics from a CardHub survey, households across the nation had an increased net debt of over $57 billion. They predict that credit card debt will reach $60 billion by year’s end, an additional 5 percent hike.
What is alarming is that with the average household credit debt hovering near $7,200, it is just a scant $1,100 from the limit of $8,300 that the credit comparison website considers to be unsustainable.
Have American consumers forgotten so quickly how debt mired the economy and forced so many homeowners into foreclosure and dire financial straits? Even though many consumers feel comfortable taking on more debt, their total household earnings have barely increased in the last decade, as reported by The Pew Charitable Trusts in February.
The danger here is that those who failed to curb their spending patterns and avoid indebtedness can be heading back down that slippery slope. More than 50 percent of adults in the United States report being financially insecure due to insufficient income, credit debt and student loans. Should the economy undergo a few stutter steps or interest rates skyrocket, it could spell big trouble for American consumers once again.
Even with these potential troubles, the charge off rate for credit card debt is at its lowest ebb since 1985, at less that 3 percent. The fact that the job market has expanded undoubtedly buoyed up consumers’ confidence in their ability to manage their debt.
Regardless of economic trends, however, some Miami residents are still struggling to reduce debt. Often the best solution is to bite the bullet and reorganize one’s debts through a Chapter 13 bankruptcy plan.
Source: CBS News, “America’s skyrocketing credit card debt,” Aimee Picchi, March. 10, 2015