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Rising credit card use may cause problems in 2016

For decades Americans in Fort Lauderdale, Florida, and elsewhere in the country have been using credit cards to build credit, to fill the gaps when a paycheck is insufficient or just to buy things now and pay for them later. ValueWalk.com reports that at the beginning of 2015, consumers worked at paying down their credit card debt, lowering the national amount by $35 billion during the first three months of the year. However, that reduction was short-lived as debts rose over the next six months.

Card Hub, which provides credit card industry information to consumers, runs an analysis of credit card use, including repayment and new debt added in the United States each quarter. That organization indicates that the downward trend in the first quarter followed by three consecutive quarters of debt increase is typical. Compared to historical data, though, the third quarter results for 2015 may be cause for concern.

Credit card user habits have not been promising, primarily degenerating during the past 10 quarters. Now, with $21.3 billion in new debt in the third quarter and projections totaling more than $68 billion for the year, experts believe that many consumers may not be able to continue making their payments.

In spite of the fact that debt is rising to potentially unsustainable rates, credit card companies are not charging off outstanding balances nearly as often as they have in the past. For example, in the third quarter of 2010, companies charged off over $17 billion in delinquent accounts, compared to only $6 billion in 2015, even though the overall outstanding debt is currently higher. Some people who are unable to curtail spending, pay down existing debt or find better employment to meet the cost of living have found relief from creditors by filing Chapter 7 or 13 bankruptcy.

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