As part of a concerted effort to maintain the levels of credit card debt, many consumers have been trying to pay off their bills and slow down on unnecessary spending and the buying of luxury items.
Many of the consumers who received tax refunds this year from the federal government allocated much of that money to pay off credit card debt and other outstanding bills rather than making smaller purchases or buying a single big-ticket item.
In fact, a number of consumers who received tax refunds from the government had tagged much of the money to pay off credit card debt and other outstanding bills instead of making a big purchase.
Prudence in financial management is pretty smart trend, particularly when the economic recession continues to hinder growth and unemployment rates are still quite high.
According to a recent report, many Americans are making genuine progress with their debt management efforts.
The first quarter report for the flow of funds, issued by the Federal Reserve, has noted that the household debt for businesses, governments, and individual families has shown contraction for the second consecutive quarter.
Reviewing the summary of household debt, the Federal Reserve reported that that home mortgage debt was a wash and consumer credit shrank at an annual rate of 3.5%.
Borrowing rates have decreased among many consumers simply because they’ve lost household wealth during the ups and downs of the recession. In fact, household net worth, which is the difference between the value of assets and liabilities, is currently at about $50.4 trillion. It is about a $1.3 trillion drop from the last reading.
Falling stock portfolios and lower home values are the two big factors that most believe contributed to the loss of net worth.
Of course, at the same time household debt was dropping the federal government boosted its own spending. As such, the Fed’s flow of funds report noted that government debt was at 23% in the first quarter, with much of the cash flowing to damaged Wall Street banks and programs aimed at stimulating job development across the country.
Related Articles
- A New Perspective On Credit Card Debt Credit card debt has long been a hallmark of the average American. Everyone walks around with credit card debt even as they pull out their trusted cards to charge
- Overdraft Fees Can Become A Major Household Expense When you are preparing a household budget, chances are you don’t include a line for bank overdraft fees. Overdraft fees are never planned and certainly incurred by “accident”.
- Credit Card Debt Is Not Limited To The Middle Class Credit card debt is primarily thought to be a problem restricted to the lower income bracket. Middle class and lower class are the ones thought to carry the largest and
- Budgeting Is A Valuable Tool For Debt Relief Most people feel adverse to the concept of budgeting when it is mentioned. They often think that doing such a thing means basically admitting that they're poor. This couldn't be
- Reduce Debt By Cutting Energy Use With the economy in the state of a recession, Americans are trying to make ends meet. No matter which way you look at it however, the one fundamental struggle that
