Credit Card Debt Increasing
Debt has been increasing, and it has seen its largest jump since 2008 last year. This is when debt increased by 3.8 percent. Americans may believe that the fact that debt is increasing means negative things for the economy, but it actually signifies the opposite. The type of debt is what has been of interest recently to financial advisors, and it shows that the economy may be improving.
The type of debt that has been increasing lately is non-revolving credit. These types of loans are:
• For purchases, such as furniture
• To finance education
• To buy an automobile
• To buy a boat
• To buy a mobile home
What Increased Non-Revolving Debt Means
The fact that the debt that is increasing is non-revolving credit means that Americans are feeling confident again. When they were concerned about whether or not they would have their jobs the next day, they were refraining from making large purchases. Now that Americans feel more confident about the economy, they are willing to make larger purchases again.
Revolving Debt Decreased
Not every type of debt has increased. One important type of debt has been decreasing, and this is credit card debt. Credit card debt, also called revolving credit, fell at the same time that non-revolving debt increased, offering further proof that Americans are struggling less. Another important indicator of this truth is evidenced in the fact that people are becoming delinquent on their credit card accounts at a much less frequent rate.
Increasing Non-Revolving Debt with Decreasing Revolving Debt
Non-revolving debt increasing at the same time that revolving debt is decreasing is a very good sign for the economy. What can be deduced is that the same people who are making larger purchases are those who are paying their bills. This trend is expected to continue into the near future.
A Narrowing Trade Deficit
The spending behavior of Americans is signaling an improvement in the economy, but progress can also be seen on a larger scale. According to the United States Census Bureau, the trade deficit has been narrowing. Currently, oil prices are rising and, as a result, food prices also have been on the rise, so financial experts will be watching these trends to determine whether or not the economy will continue to move further and further into positive territory.
The benefit of Americans spending more on large purchases means the economy is being stimulated on a large scale. At the same time, they are not having difficulties repaying the money they borrow. If oil and food continue to rise in price, some hope that Americans will be able to handle these increased expenses and that the economy may not suffer greatly.
Managing Credit Card Debts
Although Americans seem to be having an easier time paying their bills on time, there still may be those who are having a few difficulties repaying their credit card debts. These people may benefit from credit card debt consolidation. Credit card debt consolidation will reduce all their debts into one, and make it possible for them to enjoy what the rest of America is enjoying, a better economic climate.
Sheryl Fabia is an in-house writer for Franklin Debt Relief. She writes articles on various financial matters and has them published across the web.
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