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Report: Average credit card debt rises
Credit report company TransUnion is reporting the average credit card debt per borrower grew five percent in the latest quarter and average debt is now almost $5,000.
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The credit report company TransUnion is reporting that average credit card debt per borrower grew five percent in the latest quarter. So, if Americans are starting to rely on their credit cards again, is that a good sign or a bad sign?
"The uptick that we are seeing in credit card debt is not by itself alarming," says Katie Porter, a law professor at UC Irvine who tracks consumer finance issues. According to Porter, the credit report only reveals a small portion of the overall picture. Mortgage and car liabilites, which are major debts for most consumers, would be more telling.
Yet, Porter suggests the modest growth in credit card debt can be read as a sign that consumers are feeling slightly more confident, "They are reaching for that card just an extra time or two a month or making a little bit larger purchases," says Porter.
Upticks in consumer debt (credit cards, mortgages, car loans, etc.) is usually followed by more economic activity and thus more jobs. So, it is a good sign. It is a whole other question if we can afford to take on more consumer debt and what kind of consumers are actually accumulating debt. If it is the same kind that was buying homes in 2007-8 than we are in trouble.
Of course average debt would rise. Even though our government is trying to make us believe that economy is doing its baby steps towards recovery, they still say nothing good about personal debts. We still use our credit cards and we still fail to make in time payments. That is where the overdraft began. I have read about general overdraft Americans have today over a month ago and news said that it way bigger that it was during the same period of time in 2011. This simply indicates that we are moving in a wrong direction here. I don’t know if something is going to get better anytime soon, but it has to be stopped for sure.
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