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Consumers' increased use of credit cards greater than expected

Any Chattanooga resident who has had to climb out of debt knows that it is never easy. That is why it may be surprising to learn that consumers nationwide increased their credit card usage in May more than expected.

It appears that consumers are using credit cards again on a much larger scale. Consumer credit jumped from $10.9 billion in April to $19.6 billion in May. Further, credit card debt rose as well, to $856.5 billion in May from $849.9 billion in April, which comes out to a 9.3% annualized gain. This is seen as a positive for the economy, as it is believed that people are more willing to use credit cards and increase their balances when they feel secure about their jobs. Further, the June job report showed that the economy had 195,000 new jobs in May, further confirming this theory. Overall, these figures are taken together to show that consumer optimism is on the rise and the economy is recovering, slowly but surely.

Though an increase in credit card use is viewed by many as a good sign, there is also the possibility that people increase their use of credit cards because they are facing current financial challenges. For many people, when they are facing unemployment or unexpected expenses, they have no choice but to run up the credit cards in order to continue to put food on the table or pay for needed expenses. Oftentimes they can dig themselves into a hole that they cannot get out of alone. When that occurs, it is often necessary to seek out assistance; one sure way to deal with some debts, including credit card debt, is filing for bankruptcy. While it obviously won't create a source of income, it will eliminate the credit card debt and almost any other non-secured debt. This will likely allow the consumer to try and get a fresh financial start.

Dealing with credit card debt can often feel overwhelming, especially if it appears there is no end in sight. Help is often needed to be able to clear away that burden.

Source: The Washington Post, "Consumers break out the credit cards in May," John Waggoner, July 8, 2013

Kenneth C. Rannick, P.C.
4416 Brainerd Road
Chattanooga, TN 37411

Phone: 423-954-7180
Phone: 423-624-4002
Fax: 423-624-0509
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