All the numbers say that the economy is improving but American households are still not feeling the effects. While the Commerce Department reports a 1.1% increase in personal income and about 2.6% in household income, Americans are still not feeling the positive effects because of debt.
Statistics show what many Americans complain about. Based on the result of surveys, household debt has gone up by up to 2.5% as of the first quarter of this year. If compared to previous years, this is considered to be fastest growth rate since 2008, when the financial crisis was just unfolding.
How Americans are coping with debt
According to financial analysts who have taken the time to study the debt crisis, Americans turn to more debts in order to make a headway in the current economy. The mentality is that debts need to be made in order to make ends meet. And that’s why loans have become so tightly knit with the American way of living.
With the current economic crises, it is not surprising that most Americans are relying on their credit cards.. A few others, on the other hand, turn to online lenders for bad credit loans. Most of these people may have been denied by banks and other traditional institutions because of issues related to credit history.
Other methods of coping with debt
Still based on the survey conducted with regard to household debt, financial analysts came up with methods of coping with debt. According to them, instead of taking out bad credit loans, American families can also reduce their everyday living expenses to help put an end to financial problems.
Another building debt
Aside from loans, another building debt would be what has been derived from credit cards. In fact, credit card debt has been on the rise for the last few years. At present, credit card debt amounts to $851 billion, which is about $15,266 per household.
Apparently, the dependency on credit cards is the primary factor for the never-ending increase of credit card debt. A study shows that Americans are using their credit cards even for essential items like food.
Many of those who do not rely on credit cards though turn to online lenders for bad credit loans. However, according to experts, that is not a solution to the debt problem. In fact, bad credit loans now contribute to a huge portion of the ordinary American household debt.
As always, debt has been making the post-recession economy rather unlivable. So no matter the positive indicators coming from the housing market, the auto industry, the consumer spending and basically, the overall economy, as long as debt still exists, America will never get over its era of recession.