The use of credit cards is increasing in Arkansas and nationwide, and more consumers are missing payments, according to reports issued by Synchrony Financial, the largest distributor of retail store credit cards. Economic experts view this as a sign of an oncoming recession. It may also bring an increase in bankruptcy filings in the near future.
There is also a rising rate of household debt, which may indicate a slump in economic growth. In addition, more people are signing up for retail credit cards, which usually have higher interest rates than regular credit cards. It is difficult to analyze why people don't simply stop using credit cards when they appear to be getting burdened with the debt.
It may be a combination of higher obligations taken on during better times and getting used to certain luxury items that are outside the consumer's budgetary capacity. It could also be tied to a downturn in jobs, wages and economic growth. Once a consumer enters a cycle of excessive credit card use, it seems that the consumer finds it extremely difficult to break that cycle.
There are some things, however, that a consumer may implement to bring about an improvement, at least while trying to figure out whether more serious action is necessary. The consumer may stop spending money that is not in hand, but that is easy advice and not easy to do. The budget can be reworked and a commitment made to cut expenses where possible. Additionally, one can reduce spending to accounts with low interest rates and consider also a consolidation of several debts into one, thus reducing the number of payments.
If these types of maintenance actions lead to no relief, one may be in need of more substantial debt relief. An Arkansas citizen may benefit from knowing that bankruptcy is the strongest and safest debt relief option because it is a government program that uses a surgeon's knife rather than a dainty nail clipper to carve out debt. Generally, all unsecured debt is freed quickly and permanently in a bankruptcy.
Source: local10.com, "Early recession warning signs come into Call Christina hotline", Christina Vazquez, June 21, 2016