U.S. credit card debt up 10% -- How to live debt free
August 9, 2006

On August 7, the Federal Reserve released the consumer credit report for June. It stated that revolving credit (like credit card debt) was 9.8% higher than a year ago. The total was $820 billion, or $2,740 of credit card debt for every man, woman, and child in the United States.

This is besides the $1.3 trillion in non-revolving credit, like auto loans. That equates to an additional $4,560 debt per person, and represents a 3% increase over last year.

Higher mortgage rates have caused many families to switch from home equity loans to credit cards to finance purchases. In addition, the Bankruptcy Abuse Prevention Act of October 2005 prevents many indebted families from filing for bankruptcy, further inflating the credit debt figures.

What It Means:
Higher debt will lead to a continued slowdown in the economy, as consumers cannot afford more goods and services. It is too soon to say whether this will trigger a full-fledged recession. However, make sure your financial house is in order just in case.

Action Steps:
Pay down any outstanding credit card debt. The Federal Reserve of Chicago has an excellent site that will help you develop a spending plan to do that

. http://www.chicagofed.org/consumer_information/budgeting_and_saving.cfm

For more information about the Bankruptcy Abuse Protection Act, go to FindLaw.com at
http://bankruptcy.findlaw.com/new-bankruptcy-law/

Source: Federal Reserve Board of Governors web site, FindLaw.com