Americans are Racking Up Debt Again
Americans are spending more on their credit cards again, even prior to the official start of the holiday shopping season. While some believe that this is an indication of growing consumer confidence in the state of the economy, others warn that consumers could be turning to their credit cards because of low wages and high inflation.
Last month Americans ratcheted up their spending by borrowing from banks via credit cards. Additionally, they took out more loans to pay for post-secondary education and to purchase automobiles. According to data released by the Federal Reserve, the overall amount of consumer borrowing saw a 7.6 billion dollar surge. The borrowing increases across September and October were an abrupt about-face from the 16-month low seen in August. The numbers from the Federal Reserve report on borrowing includes credit cards, auto loans and student loans but does not account for real estate-related loans such as home equity loans or mortgages.
The L.A. Times reported that consumers amassed some 16.8 billion dollars in credit card debt throughout the third quarter, a figure that is 154% greater than at the same point last year. Additionally, the Atlanta-based payment processing company First Data revealed that Americans upped their credit card spending over the first three quarters of this year. Experts predict that the end of 2011 will find consumers shouldering approximately 64 billion dollars more of credit card debt than at the start of the year.
“Credit is back in favor,” said Silvio Tavares, the senior vice president at First Data. “Consumers have spent the last couple of years de-leveraging and reducing credit card use, but during the past month — and since April [2011] — they’ve been using their credit cards more and are starting to return to pre-recession buying habits,” as reported by The Chicago Tribune.
However many economists are speculating that any gains in spending are merely temporary. This is because inflation is out-pacing wages. Some experts warn that the increase in borrowing may be a result of the meager earnings of workers.
“Many Americans had to break out the plastic in the past couple of months since disposable income, adjusted for inflation, was in negative territory for each month in the third quarter,” stated Chris Christopher, a senior economist at IHS Global Insight, according to The Washington Post.
Some economists and financial experts also harbor concerns that the current debt crisis in Europe will lead to a recession overseas. This would have a negative impact upon U.S. growth.
Latest Other Card News
2020 has definitely been a very unusual and challenging year. Many of us have been waiting for its end more than ever. And now, when there is less than a week left until the beginning of the new year, it’s time to sum up the outgoing one and find out the results of the annual […]
Walmart is finally ready to introduce a new subscription service offering free same-day delivery and fuel discount. Walmart+ was supposed to go live back in July, however, it was delayed due to the COVID-19 outbreak. Now the launch is planned to take place on September 15. The new product will help you order any goods […]
This month, American Express introduced its new tool called MyCredit Guide. The Amex website says: “We believe everyone should know their credit score and have the tools to understand it better.” That’s why the new feature was developed. Using the tool, you can find out your credit score and take a look at your credit report, […]
A virtual credit card is a unique credit card number that is linked to your main credit card account but is different from the physical card number. The virtual credit card number allows to shop online or over the phone without using your physical credit card. The numbers can usually be used once and expire if not used. The cardholders can also delete the numbers if they want or need to.
The results of the 2019 Debit Issuer Study, commissioned by PULSE®, a debit/ATM network, and conducted by Oliver Wyman, a global management consulting firm, show that consumer debit use has skyrocketed in the last year and will keep soaring. In 2018, the number of debit transactions increased by 6.7% reaching more than 68 billion. According […]
