Even the most skeptical among us can agree that the economy is finally starting to show signs of sustained recovery following the recent recession, as foreclosures have dropped, employment is up and consumers are spending more.
Indeed, a recently released report by the website CardHub.com suggests that not only are consumers spending more here in the U.S., they’re relying more on their credit cards to do it, while not necessarily paying them down very quickly.
According to the report, $32.5 billion of credit card debt was paid down by U.S. consumers during the first quarter of 2014. While this certainly seems like an impressive figure at first glance, it’s actually 28 percent less than the amount of credit card debt paid down by consumers in 2009.
This is significant, say the report authors, because it demonstrates that while consumers were perhaps more wary — and perhaps even afraid — of accumulating credit card debt in the immediate aftermath of the recession, this apprehension is now fading.
As a further illustration of this point, consider that the CardHub.com report also determined that consumers are currently on track to end 2014 with $42 billion more in credit card debt than in 2013, an 8 percent increase.
Why then is the prospect of consumers charging more and paying down less so concerning to experts?
The report authors indicate that the accumulation of significant credit card debt makes people financially vulnerable, such that an unforeseen event like unemployment, divorce or prolonged illness can create major money problems overnight.
While this report is indeed disturbing, it’s extremely important for those people facing seemingly insurmountable credit card debt to understand that they are not without options, and may be able to secure the fresh start they need and deserve via personal bankruptcy.
Source: Time, “The credit card bomb just waiting to go off,” Martha White, June 11, 2014