In an alarming bit of news, credit card debt grew by leaps and bounds in 2011. Last year alone, $48 million was added to the total credit card debt in the United States. The problem is that the economy and jobs aren’t keeping pace.
Each month, consumers watch for various reports that tell the tale of the national economy and this latest statistical release suggests Americans are spending more, even as new jobs numbers aren’t keeping pace.
As one analyst said, consumers and their ability to properly manage their debt appears to be lagging.
Looking back two years, with the exception of a single quarter, U.S. consumer-debt management has consistently worsened,
reports the Chicago Tribune.
First-quarter pay-downs have become less significant, and the amount of new debt added in each subsequent quarter has grown compared to its respective counterparts in the previous two years.
In February, the average balance for credit cards hovered near $6,105. That number was slightly higher than January’s figures of $6,069. Still, consumers did manage to eliminate approximately 8% of their total debt compared to December 2011, which came in at around $6,575. For those looking to better temper the news, it should be noted that last year’s figures were higher. On a national level, the total was $7,168.
Some say that fact does more than temper the disturbing side of the statistics. It’s believed spending will continue to increase as more banks and credit card companies begin to loosen their lending requirements. This will result in more credit cards – and of course, personal loans, mortgages and other loan products – being used to further build the economy. In fact, that trend has already begun as credit card companies report a rise in spending.
Card Companies Weigh In
Both Visa and MasterCard are already reporting an increase in both the number of credit cards being issued as well as the charges being put on their cards. Both report around 25% increases between January and February. This is in line with the government report that was released this week.
Still, some analysts are concerned this false sense of “better times” could result in difficult financial burdens in the future. It will become harder to manage debt if the economy doesn’t pick up its pace and grow as quickly as credit card debt is now expanding. Unemployment numbers, while they are improving, simply aren’t keeping pace with what’s necessary for a full economic recovery.