Borrowing Among Consumers Slows
Ugh, it’s hard to keep up with what’s going on in the crazy economy today, isn’t it? I swear just a few short weeks ago, I read a headline that promisingly claimed that US consumer borrowing was on the up trend. Not so any more according to this latest headline, claiming that no, consumer borrowing is in fact on a downswing. Apparently it has to do with credit cards (we wonder why we have bad credit these days, read on for more of why) Can’t keep up? Neither can I, so bear with me.
They have all these nifty figures that they use to figure out whether consumer spending and borrowing is up, but what they don’t tell you is that even though it may be technically “up” from last year, it’s still not considered “up” to them because they have already made projections about what it would be at for the next year at the same time.
Not really sure how they come up with all those numbers, since I haven’t heard of a recent population explosion which would lead me to believe that consumer borrowing or spending would skyrocket in one certain year over the next, but I guess we should listen to them because they’re the experts. Economic analysts had expected consumer borrowing to be up more than it actually was, so apparently this is a signal of some sort that yes, we are indeed experiencing a faltering economy right now. News flash, right?!
The bad part is that consumer borrowing went down in relation to non-revoloving types of credit, such as mortgages and loans, but went up ever so slightly for other sectors that really don’t benefit the consumer because they are charged on a revolving basis, which means the consumer is charged on purchases they made months ago but havent’ paid off, over and over and over until the card is paid off. It’s a system where credit cards, even the best credit cards out there, charge interest every month, even on balances that are carried over.
So you don’t just pay interest once on that set of dishes you charged on your favorite low fixed apr credit card, but you keep paying whatever percentage you signed up for over and over again on that amount until it’s totally paid off. Raw deal, but also a great deal when you think about the things you have been able to purchase because of credit cards that would not have otherwise been possible due to budget restrictions.
