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Consumer Credit Rises $17.1B, Which Means Times Are Still Tough

Written by alexavatar

People want to believe that times are getting better, but the recent numbers coming from the Fed regarding consumer credit seems to indicate otherwise. May 2012 showed a jump in consumer credit by $17.1 billion, which is a pretty astounding jump considering people were all hoping that things were getting better.

In fact, it wasn’t just consumers that were hoping and expecting things to look better, but the economists were also hoping too because both April’s numbers, which showed a jump in consumer credit of $9.95 billion and May’s numbers were much higher than estimated. The Bloomberg News surveyed 32 economists to determine their estimated consumer credit increase for May and the median answer was approximately $8.5 billion. Clearly they underestimated by more than half.

Unfortunately, the increased credit numbers mean that people are borrowing more paying off less. These numbers are also disheartening considering the recent unemployment numbers that were released for June, which showed that unemployment was holding steady at 8.2 percent, which equates to approximately 12.7 million people.

One statistic that may be positive from this recent report from the Fed is that non-revolving debt increased by $9.1 billion in May. Non-revolving debt would include educational loans or car loans. Although these numbers show that people are still taking on debt, they are also  spending money in the economy by buying cars and investing in education. Most economists agree that the best way to improve the economy is to start spending money, so this is a good sign.

A consumer should be very cautious to carefully consider the type of credit card they are making ties to because it seems that credit card debt is inevitable right now, at least according to the recent May numbers. However, the consumer can still have control over the type of card they use and the perks rewarded with every dollar spent. Today, credit cards companies are competing with one another to convince the consumer to use their card. Clearly people are using cards in general, per the recent numbers, but choosing this card over that card is the key. With competition comes better and bigger deals.

Since it seems that most people have to deal with credit card debt in their life, at least for a little while longer, the consumer might as well make sure that the debt and future purchases work for them too by rewarding purchases with bonus points, cash back, or miles.