Consumers’ credit card debt fell in troubled states, rose overall

The amount of credit card debt carried by consumers has generally been much lower in recent months than it was during and immediately following the  recession. However, while those in areas hit hardest by the downturn continued to cut balances, it wasn't enough to counter the renewed trend toward more spending.

Consumers' outstanding credit card bills totaled $585.3 billion in August, an increase of 0.2 percent when compared to the same month last year, according to the latest data from the credit monitoring bureau Equifax. This is yet another indicator that declines in credit card borrowing may have bottomed out, and the debt totals for this type of credit will likely remain flat for some time, or even start to rise again.

However, the numbers seen last month are also considerably lower than what was observed during the financial crisis, the report said. Compared with October 2008, the recent totals are down 22 percent.

"We are seeing the trend of the 'disciplined consumer,'" said Trey Loughran, president of the personal solutions unit at Equifax. "We don't know whether this is a long-term change yet, but generally speaking, Americans today continue to be prudent about credit."

Improvements where consumers need it
Though there was a slight increase in the amount borrowed nationwide, many metropolitan areas across the country actually saw declines in the amount they owed to credit card lenders, the report said. That was largely driven by drops in regions hit hardest by the recent national recession, where consumers are still continuing to spend more frugally than in the past.

For instance, the amount of debt held in a large swath of Southern California, including Los Angeles, Riverside and Orange counties, saw the amount owed by borrowers there slip 1.7 percent to slightly more than $34.42 billion from last August's total of more than $34.83 billion.

However, that was outstripped by the Las Vegas area, which was one of the most affected areas during the recession, the report said. Credit card debt there continued to fall, drop 1.88 percent to $3.69 billion from $3.76 billion. Further, the areas around Detroit, Ann Arbor, and Flint, Michigan, saw debt slide 1.8 percent to less than $9.79 billion from $9.97 billion.

Others spending more
But despite the declines there, consumers in other areas had to spend more to make up the slight nationwide increase, the report said. Part of the problem there is that the amount of debt carried by the most affected areas are relatively miniscule compared with those where the effects of the recession weren't felt as heavily.

For instance, the area around New York City, Northern New Jersey and Long Island saw credit card balances rise 0.45 percent, but that increase accounted for roughly $220 million, the report said. In all, consumers in that area now owe a total of more than $49.66 billion, up from more than $49.44 billion

Meanwhile, the greater Houston area, which includes Galveston and Brazoria, Texas, saw a massive debt increase of 1.88 percent on an annual basis, the report said. Between last August and this year's, credit card balances there rose to more than $10.98 billion, up from less than $10.78 billion.

Reason for the difference?
The question for these two very disparate trends in consumer credit card spending and debts is why they may be taking place, the report said. However, it can be explained fairly simply. Consumers in areas that were hardest hit by the economic downturn might be more likely to continue to approach debt with caution, while those that were insulated from the largest impacts might now find themselves in a better position financially and therefore feel more secure about their spending capabilities.

"The differences between the metro areas illustrate the uneven nature of the economic recovery," Loughran said. "In places where the housing bust was the worst, such as Florida, California and Nevada, and in places like Detroit and Ohio where the recession was particularly deep because of a dependence on manufacturing, consumers are continuing to be prudent about using credit. In other pockets of the country, consumers are feeling a bit more confident to take on new debt."

Credit card use can still be troublesome for many consumers, and even those who don't have this difficulty might find themselves in precarious positions if they don't control their spending. However, before approaching any major financial decisions, you should first take the time to check your credit report. This will help you to ensure there are no unfair markings taking a chunk out of your rating, and if you find any, you may be able to work with a credit repair law firm to get the issue cleaned up.