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Appleton consumers returning to credit card debt

The economic turn that many Americans experienced is a time for celebration as Americans begin to see the light at the end of the recession. The lessons learned about reducing debt during that time were life-saving and many Americans, including Appleton residents, should be mindful not to go back to the old ways of accumulating credit card debt.

During the Great Recession, studies showed that consumers were slowly developing better financial habits such as spending less and saving more. Analysts predict however, that this trend is in reversal once again in light of an expected $47 billion increase in new credit card debt by the end of 2013, as opposed to the $82 billion incurred in 2011-2012. At this point, analysts believe there are only two options: consumers can either continue spending at this rate until the country goes back into a recession or consumers can learn from the financial crisis and practice better money management skills. Some ideas for better money management include transferring high interest rate credit card balances to low interest rate credit cards, improving credit ratings to increase better credit options, sticking to a budget, maintaining separate accounts for varying expenses and paying off debt.

In addition to regulating spending and saving habits, consumers should also be aware of their legal rights concerning the credit card relationship in order to avoid an unfair hike in their interest rate or other disadvantages. Under the law, credit card companies cannot increase a consumer’s interest rate within the first year of opening an account unless an exception applies. Those exceptions include a disclosure of the increase at the time of opening, the increase is due to a change in an index beyond the credit card company’s control, the consumer breached a “workout” agreement or the consumer failed to make a payment within 60 days. Even if a rate increase is permitted, the increase can only apply to new purchases.

Appleton consumers should be aware of their legal rights concerning credit card debt and avoid credit card debt as much as possible. Some Appleton consumers however have no choice but to use their credit cards because of financial challenges and furthermore, they are unable to make their minimum monthly payments. In those cases, consumers need not struggle with high interest rate credit cards because bankruptcy is a viable option. Consumers can consult a bankruptcy specialist to learn more about their legal rights.

Source:¬†Yahoo News, “Credit card debt forecast signals ominous warnings to consumers,” Odysseas Papadimitriou, July 3, 2013.

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