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Credit card debt rises for American consumers

Credit card debt tends to follow economic trends in America. Though credit card debt was high in early 2008, it was still mostly sustainable, as the economy was strong. After the recession began later that year, however, credit card debt rose even higher as American consumers struggled to maintain their financial independence.

For the past several years, credit card debt has been dropping slowly as Americans have paid down their financial obligations or declared personal bankruptcy. This month, however, a study by CardHub.com revealed that credit card debt was once again on the rise in America.

Americans piled on an additional $17 billion in credit card debt in the second quarter of 2013. In the first quarter, Americans made remarkable gains in eliminating their credit card debt; this second quarter increase in debt eliminates more than half of those gains.

Experts say the reason may be seasonal. Most employees receive their tax refunds and salary bonuses in the beginning of the year, allowing them to pay down their credit card debt in the first quarter. Those cash infusions don't exist in the second quarter, so credit card debt tends to rise.

The increase may be the result of a change in culture, however. Few people use cash anymore; plastic is king. While many consumers are able to manage their credit cards responsibly, some are simply unable to keep up with the payments.

According to the study, the average American household carries $6,658 in credit card debt. Under such crushing debt loads, many consumers will understandably be unable to maintain their debt balances. Some people struggle for years to pay off more than the minimum balances, before finally conceding that the task is impossible. In such cases, declaring personal bankruptcy may be the best option for indebted consumers.

Source: WWLP-TV, "Credit Card Debt study" David McKay, Sep. 10, 2013

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