As most residents of Florida probably already know, there are signs everywhere that our nation is recovering from the recession. The housing market is improving and consumer confidence is rising. Yet this economic recovery also means an increase in credit card debt. Right now, consumers are better at paying their credit card bills on time, but if there is an increase in interest rates, it could cause problems down the road.
The Federal Reserve recently released monthly data that shows that revolving credit, including credit cards, increased $6.6 billion from April to May of this year. This is the biggest increase since May 2012. This suggests that Americans are more confident about their personal finances.
Despite this increase in credit card debt, fewer consumers are going delinquent. According to the American Bankers Association, delinquent accounts have fallen to 2.41 percent – the lowest rate since 1990. There is speculation that many Americans established better financial habits because of the recession, so more are paying down their debts in a timely manner.
Despite these positive signs, interest rates are rising for other types of loans such as mortgages and student loans. Credit card interest rates remain steady for now, but any increase in the future may make it more difficult for Florida consumers to pay off their credit card debt. If this happens and debt becomes overwhelming, individuals may have to investigate what options are available to them in order to get rid of debt. In some cases, bankruptcy may offer the best solution by either discharging the debt altogether or establishing a payment plan with creditors that allows the consumer to get a handle on his or her debt and establish good financial habits.
Source: Forbes, “Credit Card Debt Soars, Yet Delinquencies Fall,” Bill Hardekopf, July 11, 2013