Economic conditions have been moving toward significant improvements in recent months, and in general that has been good news for consumers. But at the same time, rising prices have led more to start dealing with credit card debt again.
There have been a number of positive economic indicators for consumers in the last several months, but one area that has been problematic for some is rising prices for necessities, according to a report from MSNBC. Even as unemployment has fallen to a recent low of 8.3 percent over the last several months after standing at 9 percent as late as September, and payrolls have been steadily increasing for companies in many industries, there remain some concerning economic factors that have caused consumers some worry.
In particular, the rising price for a gallon of gasoline may be causing consumers to alter the spending and savings plans they may have laid out for themselves since the end of the recession, the report said. Spending on credit cards had been falling, and contributions to savings accounts had been on the rise in the last several months, but now those trends are reversing. However, there may remain some reasons for optimism.
"The bad news is that pump prices will start approaching the $4.15 [or] $4.20 per gallon range by Memorial Day," Chris Christopher, a senior economist at IHS Global Insight, told the news station. "The good news is that a relatively stronger job and stock market are assisting in holding up consumer spending and confidence."
The latest data from the Federal Reserve Board indicates the amount of credit card debt carried nationwide has risen 8.3 percent since it hit all-time low levels in May 2010, and some experts believe much of that is the result of consumers not being able to fit rising prices for gasoline into their monthly budgets, the report said. This change comes even as some studies have shown a larger number of consumers are using their credit cards to make everyday purchases, but paying those balances off in full at the end of every month rather than carrying any over and incurring any added debts. This process, known as "transacting," is favored by many who like the flexibility afforded them by credit cards but want to avoid taking on large amounts of debt as they may have prior to the economic downturn.
At the same time, though, consumers may also be changing their savings schedules to better afford these rising prices, the report said. In the last month, the portion of disposable income that consumers are putting into savings slipped to just 3.7 percent, the lowest level seen since August.
Consumers who want to avoid taking on large amounts of debt might want to check their credit reports to make sure there are no unfair markings bringing down their credit score. Consumers with lower credit ratings will typically pay higher interest rates on their various loans.