Study: U.S. Consumers to Add $43.5 Billion in Credit Card Debt During 2012
October 1, 2012
American consumers are projected to rack up $43.5 billion in credit card debt in 2012, for the second year in a row. Optimism about economic recovery has caused many consumers to return to pre-recession spending habits. However, the pre-crisis economy was buoyed by a real estate bubble, which created a "new normal" when it popped -- not a temporary setback. Therefore, writes Card Hub and Wallet Hub CEO Odysseas Papadimitriou, Americans should make a more concerted effort to cut back on spending. Consumers who are employed and still have access to credit are the ones with the largest credit card balances, rather than those who are suffering financial hardship and are in no position to spend less than they bring in each month. Much of this may be due to a widespread lack of financial literacy. Forty-two percent of people give their personal finance knowledge a grade of "C" or worse, reports the National Foundation for Credit Counseling's 2012 Financial Literacy Survey. Limited spending requires improved budgeting. Expenses should be listed in order of importance, and expenses that will go over an affordable amount should be eliminated. For existing debt, consumers with excellent credit should transfer their balances to a 0 percent credit card, giving themselves more than a year to pay down what is owed without interest. Using one credit card to revolve debt and another for everyday purchases can also help with budgeting.
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