Another Sign of a Troubled Economy?

Have recent problems with sub-prime mortgages and the housing bubble forced consumers to use credit cards more often and increase their debt? This week's study released by the Federal Reserve showed that credit card debt jumped higher than expected, up $6.8 billion, or an annual rate of 6.7%

"Last month alone, credit card debt increased an average of $81 for
every household that has a credit card. In February, it increased $26 per household with credit cards so that is over $100 in two months. This continues the growth of
credit card debt that increased $600 per household with credit cards
in 2006 " says Bill Hardekopf, CEO of LowCards.com. "This increase in credit card debt could be the ripple effect of households struggling to deal with major financial issues like the increase in sub-prime mortgage rates, the housing bubble, and higher gas prices. I think this is an indicator that more households are in financial trouble. When people run out of financing options and money, they use credit card to help them get by."

Consumers using credit cards to get them through the month are in a dangerous situation. One late payment or missed minimum, and the fees and universal default rates could be devastating. There are several tips for consumers to help reduce the credit card dangers.

"Consumers can help themselves by paying the card a week before it is due to avoid any chance of a late payment. Pay more than the minimum, even if it is only a few dollars each month," says Hardekopf. "If you are hanging on and still keeping a good payment history, call your issuer and ask for a lower rate. If you get a lower rate, use the rest of your payment to pay down your minimum balance.

Most importantly, do not use your credit card for small purchases that are not necessities. Do not pull out your credit card at a restaurant; you do not need to take out a loan for that meal. Every time you use your credit card, ask yourself if you really want to pay 15-25% interest on that item.