Even though the recession may be officially over, many people–especially New York residents–carefully watch financial indicators to assess the strength of the economy and whether the rebound will continue. Statistics relating to credit card debt are commonly studied because they can provide data on how well American households are faring financially and how they are spending–or not spending–their money.
According to information from the Federal Reserve, credit card debt in the country has decreased by approximately $208 million this past August. This was the first time in six months that credit card debt has decreased. In contrast, the numbers from the Federal Reserve reveal that levels of other debt and consumer borrowing have increased. The category of debt and borrowing that includes auto loans and student loans showed an increase of $13.5 billion, which is less than the level of increase in July: $21.6 billion. Altogether, these increases have raised the amount of consumer debt to $3.25 trillion. Although individuals often view debt as a bad thing, increasing levels of consumer borrowing is generally seen as a positive sign for the economy, showing that consumers feel confident enough about their financial situations to take on more debt.
Although those who study the economy tend to view increasing debt as a good thing, the experience of individual consumers may be very different. Many consumers take on debt when they feel financially secure enough to repay it in a timely manner, only to find themselves burdened by the debt later when circumstances change. After a few delinquent payments, the stress can begin to rise due to difficulties in covering expenses and potential creditor harassment. High levels of credit card debt can increase even more if people attempt to cover other expenses with the help of credit cards.
When New York residents find themselves faced with serious financial struggles related to credit card debt or other financial obligations, one of the first steps to take is finding out what options may be available. Many people may feel hopeless, like there is no way out, but that is often untrue. In many cases, consumers-assisted by an experienced attorney-may be able to negotiate with creditors to reach a more manageable debt level or payment plan. Other consumers may benefit from filing Chapter 7 or Chapter 13 bankruptcy. It is best not to wait until the situation really unravels, however, because people often have more options soon after problems begin than after letting them worsen for some time.
Source: LIBN.com, “Consumer borrowing up $13.5B,” Oct. 7, 2014