Total Consumer Credit Card Debt Continues to Fall…
Andover, Massachusetts August 13th, 2010 – As the economy continues to drag on through the dog days of summer Credit Card Debt in the US continues to fall. Consumers began their sharp cutback in 2008 as the recession really hit and have continued their purging of credit card balances ever since. The latest data released by the Federal Reserve is for June and it shows another $4.5 billion drop to $826.5 billion. This is encouraging news for economists who have insisted since 2008 that Americans needed to readjust and balance their financial lives and rely less on Credit Cards to make ends meet. It has not been easy as many families built up an extravagant lifestyle over the past 10 years financed largely by credit cards and home equity.
While this news was positive, there was some underlying data which indicates the pace of frugality and the willingness of Americans to slow down their spending is fading since its peak late last year. Total Consumer credit, which includes all consumer loans outstanding other than mortgages and other debt secured by real estate fell by only $1.3 billion in June, much less than the $5.3 billion that analysts had expected. This follows in the wake of a revision in the May decline from $9.1 billion to $5.3 billion. What this data indicates is that while credit card debt continues to drop other forms of consumer debt is not dropping as quickly and is in fact slowing down. In fact, loans for cars, education, and other uses actually increased in June by $3.2 billion.
What does this data all mean? Clearly consumers have realized that credit cards are one of the most expensive ways to finance a lifestyle. This realization is long overdue but is a positive development for the country moving forward. The rise in education loans is to be expected as the entire education sector continues to grow and expenses continue to rise. The fact that car loans also increased could be an indicator that consumers have been delaying their purchases since the recession began two years ago and have now finally decided to upgrade.
Readers, what do you think? Have consumers really figured out how to live within their means or is the rise in car loans a leading indicator that the American consumer will be making a comeback shortly? And if so, is that good news? I know our economy is dependent on consumer spending but isn’t that exact spending a reason why so many American families are currently in deep financial trouble?
Preferred Financial Services is a debt reduction firm certified by the CFC (Center for Financial Certifications) and accredited by U.S.O.B.A. (United States Organizations for Bankruptcy Alternatives). Headquartered in Andover, Massachusetts, Preferred Financial Services has been a leader in the debt reduction industry since 2003. Preferred Financial Services has acquired some of the best experience in the industry over the past 7 years. In 2009 alone Preferred Financial Services reduced over $16.5 million worth of consumer debt for just $6.4 million, for a savings of about 60%- and over 2,900 accounts were settled on behalf of their clients.
For more information, please visit www.pfsdebtrelief.com or follow us on our blog at www.pfsdebtrelief.com/blog/ .
Contact:
Stephan Tavernini
Marketing Coordinator
Certified IAPDA Debt Arbitrator
Preferred Financial Services
