Oh yes, the days of tons of credit card debt are back. According to the Federal Reserve, the amount of consumer credit card debt increased in December 2010 – we haven’t seen a jump in the amount of consumer credit card debt, since 2008, which was the height of the Great Recession.
Revolving debt (credit card debt) was up by 3.5% in December to $800.5 billion. Nonrevolving debt (like car loans or student loans) jumped 2.8% to about $1.61 trillion. Total debt increased by 3% to about 2.41 trillion.
Why the Upswing in Debt?
December is the height of the holiday shopping season. According to the National Retail Federation, consumer spending during the 2010 holiday shopping season rose by some 3.3%. Consumers felt more at ease with their financial situations last December and after tighening their belts for the 2008 and 2009 holiday shopping season, it was time to hit the stores.
This Isn’t Good News
An increase in consumer credit card debt is never a positive sign for our economy. That money has to be paid back to the creditors! Consumers who racked up credit card debt in December are currently suffering with a minimum payment, damage to their credit score and in some cases sleepless nights. HelpSaveMyDollars.com always urges consumers to make purchases with cash – if you can’t afford an item, don’t buy it! Using a credit card to pay for an item that you really can’t afford makes no sense. Unless you have the liquid cash, you can’t afford it and thus shouldn’t buy the item.
How to Get Out of Debt
Luckily, HelpSaveMyDollars.com has tons of resources to help you pay off debt. Visit our Credit Cards section for more information or this specific article, which offers tips on reducing debt.
Here are a few simple tips:
1. Pay MORE than the minimum payment!
2. Start paying off the credit card with the highest interest rate first.
3. Look into opening up a balance transfer card, where your transfer your credit card balance to a credit card with a promotional interest rate that is very low. Visit BankingMyWay.com to search for balance transfer cards.
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