There was great news last month when consumer revolving credit, which is mostly credit card debt, decreased by some $2.73 billion in February. A continued decrease in this number could have signaled that consumers were finally trying to break their terrible credit card debt habit. Instead, consumers decided to take their credit cards out onto the dance floor again this month by adding $1.13 billion to their consumer revolving debt.
While these figures might be good news for the overall economy, they are terrible news for individual consumers and their personal finance. One of the first rules of personal finance is to live within your means by spending less than you earn. Consumers putting more revolving debt on their credit cards shows that many still haven’t learned these lessons.
For those that currently do have credit cards that they aren’t paying off in full each month, doing so as quickly as possible should be their number one priority. The first step is to realize that consumer debt is bad for your personal finances. The next step is to put together a plan to eliminate the debt that you have. There are a number of snowball methods that can help anyone pay down their credit cards and other personal debts, plus a couple of easy ways to build an emergency fund so that there is no need to put debt on the credit cards or borrow in other ways in the future.
Until consumers realize that credit cards aren’t free money, and that they cost a small fortune in interest payments when not paid off in full each month, they are going to continue to struggle to meet their financial goals. The goal of almost every consumer should be to be debt free as quickly as possible. These latest numbers from the Federal Reserve show that there are still far too many Americans that suck at personal finances.
(Photo courtesy of Jason Rogers)