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Overwhelming debt from credit cards decline nationwide

Americans have been more wary of using credit cards since the recent recession. This is because overwhelming debt from credit cards was a significant contributing cause to the recent economic downturn in Texas and the rest of the nation. In July, revolving credit, which includes credit cards, fell by $4.28 billion. Although this may at first seem like a good thing, many financial experts believe this signifies a lack of economic growth.

Revolving credit has now been declining for three or four months in a row through July. This trend has not been seen since the beginning of 2011. Some note that this is a result of a slow in hiring, as well as a decline in factory activity. The credit data is also consistent with slow gains in consumer spending throughout the economy.

Overall, credit had been expanding since mid-2010 when the U.S. economy began recovering from the recession. However, interpreting credit data may not be completely straightforward. Declining debt may not always be a sign of a weak economy and lack of consumer confidence. It is possible that people are relying less on credit cards due to increased income. Also, government loans to students increased by 24.8 percent in July from a year earlier.

Although credit has shown a decrease, there are still many people in Texas and elsewhere who have had to continue to use their credit cards just to keep the roof over their head. In some instances, the unfortunate result is overwhelming debt. Fortunately, debt relief options like bankruptcy protection offer the opportunity for individuals and families to confront their financial problems head-on, while mapping a strategy for a return to economic prosperity.

Source: Chicago Tribune, "U.S. consumer credit shrinks in July," Sept. 10, 2012

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