Faced with layoffs and high prices, consumers rely on credit cards to cover basic expenses. While the economy is slow, consumers need to make an effort to avoid credit card spending.
Ft. Lauderdale, FL (PRWEB) July 19, 2012
As a result of a slowdown in job growth and a decline in consumer confidence, credit card debt reached its highest point since November 2007.
With more consumers turning to credit cards for purchases, revolving debt rose by $8 billion, increasing the total credit card debt to $870 billion, according to the Federal Reserve.
Howard Dvorkin, CPA and founder of ConsolidatedCredit.org warns consumers to reduce credit card spending as the recession is not over. “Faced with layoffs and high prices, consumers rely on credit cards to cover basic expenses,” says Dvorkin. “While the economy is slow, consumers need to make an effort to avoid credit card spending.”
According to the Federal Reserve, consumer borrowing rose by $17.1 billion in May, landing at $2.57 trillion. Borrowing increased significantly due to record levels of student and auto loans, which reached $1.7 trillion.
“Economists consider borrowing a positive sign for the economy, but it can also mean consumers are borrowing because they lack funds to pay for things like their mortgage or student loans,” says Dvorkin.
Dvorkin offers tips for paying off credit card debt:
- Pay more than monthly minimum: Try to pay more the than just the minimum amount due. Any amount paid over the minimum goes directly towards the balance owed. This allows debt to be paid off faster reducing overall interest.
- Set priorities: Making a list of priorities helps consumers to focus on saving money for important goals. Consider whether a summer trip would jeopardize the purchase of a house.
- Avoid accumulating debt: Now is not the time to apply for new credit cards or loans. Focus on paying off current debt. It’s difficult to get out of debt when new debt is mounting. Use cash for purchases rather than credit.
- Pay off high interest rate debt first: The most efficient way to reduce debt is by paying down the highest interest rate balances first. Once high-interest debt is paid down, tackle the next highest, and so on. Continue paying the minimum due on all other debts.
About: Consolidated Credit, founded in 1993, is one of the nation's largest credit counseling organizations in the country and has helped over 5 million people with financial issues. Their mission is to assist families throughout the United States in ending financial crisis and solving money management problems through education and professional counseling.