Washington residents should take heart that the nation’s economy appears to be getting stronger. But there is a caveat — with the burgeoning economy, Americans credit card debt also is swelling.
Last year saw a $57.1 billion net increase in additional credit debt, according to one survey, which also forecasts a 5 percent increase this year to a total of $60 billion. That’s a lot of debt from plastic.
The problem is that although consumers are saddling themselves with more debt, wages are hovering only 2 percent higher now than 10 years ago, as reported by The Pew Charitable Trusts from an earlier study.
The average household credit card debt is approximately $7,200, just a short margin from what one credit card comparison site considers to be an unsustainable limit of $8,300. According to CardHub, the “six consecutive quarters of year over year increases in our credit card debt load” can make an unbearable consumer debt burden for consumers.
Does this indicate that Americans are headed for another economic stumble similar to the one they experienced only seven years ago in 2008?
Possibly, but it could also indicate that consumers are simply feeling bullish about their economic prospects and their confidence to fulfill their financial obligations. Yet over 50 percent of Americans expressed concerns of financial insecurity in the form of debt from student loans and credit cards to income that doesn’t meet their needs. Should another financial crisis pop up and interest rates rise precipitously or the economy bottoms out, these American consumers will really feel a financial crunch once again.
What can consumers do to protect themselves? Reining in out of control spending is the first step. If that is not enough, they may decide to consult an attorney about filing for consumer bankruptcy protection.
Source: CBS News, “America’s skyrocketing credit card debt,” Aimee Picchi, March. 10, 2015