Credit Card Debt on the Rise in America
Even though America’s economy is in somewhat better condition now, studies show that credit card debt is at the highest level since 2008. Based on data from the Federal Reserve, outstanding credit card debt is set to hit $1 trillion in 2016. This indicates that consumers are reverting to pre-recession spending patterns.
A rise in credit card debt usually signals an improving economy. It shows that Americans think the economy is doing better, more people are working and earning a salary, and have more money to spend. However, this mind-set also affects how they save. Americans’ personal savings rate was 4.4% back in 2008, it went as high as 11% in December 2012, and is now back down at 5.4%.
There are other indicators that this rise in debt might not be all good news. There are indicators that growth is flattening. New York Federal Reserve President William Dudley said recently that the balance of risks to his growth and inflation outlooks may be starting to tilt slightly to the downside.
How to Manage your Credit Card Debt
Good credit card management boils down to:
- Making payments on time
- Paying more than the minimum payment due
- Keeping balances low
- Having a portfolio of cards with good rates
While it may seem to be the wisest course of action to make every effort to pay down your credit cards at the expense of other financial goals, experts advise that you focus on increasing emergency savings, taking advantage of the employer match in a 401(k) plan, and investing while paying down debt.
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