National credit card debt levels continue to fall
The recession that began in 2008 impacted families throughout the country in many ways. However, one legacy of the economic downturn that is really starting to take hold appears to be a change in consumers’ spending habits. According to the Federal Reserve, nationwide credit card debt fell for the fourth straight month.
In September, it’s estimated that revolving credit (largely comprised of balances left on credit cards) fell by an annualized rate of 2.91 percent. Taking into account seasonal spending factors, this translates to a decrease of more $2 billion in credit card debt. Although this may be good news for many people, the reality is that financial problems are still affecting many families in the Atlanta area.
One interesting note from the Federal Reserve’s report is that the amount of borrowing to purchase homes and automobiles actually increased over the same period. Observers suggest that this means consumers are more willing to spend money on long-lasting goods, rather than use their credit cards to pay for shorter-term goods and services. As the economy continues to recover at a very measured pace, people are hesitant to assume too much debt.
However, while some individuals are working on minimizing their credit card debt loads, others are struggling. The burden of credit card debt can impact credit scores and other financial factors that prevent people from making long-term investments, such as buying a house.
One important thing to remember is that there are ways to effectively deal with credit card debt. In some cases, Chapter 7 bankruptcy protection might be the best option. Through this process, consumers are typically able to discharge unsecured debts, including credit card bills.
Source: Wall Street Journal, “Credit-Card Debt Declines for Fourth Straight Month,” Jeffrey Sparshott, Nov. 7, 2013