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Is downward trend in credit card debt good or bad omen?

The U.S. economy is said to be on the mend. By nearly all the measures experts like to use, the signals are positive. The positive numbers may not be as robust as might be desired, and the negative numbers might not be weakening as quickly as they could, but the trends appear to be in the right directions.

Home prices are ticking up. Foreclosures appear to be on the wane. Employment rates are still far from ideal. One figure; the rate of consumer credit card debt; seems to leave many experts in Arkansas and the rest of the country waffling.

The Federal Reserve issued a report recently noting that credit card debt fell in July for the second month in a row. As reported widely across major media outlets, revolving charge account balances, which are primarily made up of money owed on credit cards, fell by something just over $1.8 billion in July.

On an annual basis, that represents a 2.6 percent rate of decline. In June, the rate of decline in revolving credit was 5.2 percent.

Considering that the mountain of credit card debt consumers were bearing just before the country went into recession, one might expect experts to see the reining in of credit card balances as a good thing. But some analysts express concern. They say consumer spending (much of it driven by credit card use) is a key driver of the economy. If it lags, it could slow overall economic growth.

Such concerns from pundits are only to be expected. That's what they get paid to worry about. Meanwhile, average consumers dealing with the day-to-day decisions may face unforeseen circumstances that dictate what gets spent on what. If that winds up leading to legal action by creditors, the wise consumer should consider turning to an attorney for help.

Source: Forbes.com, "This Week In Credit Card News: Declining Credit Card Debt, Avoiding the Outrageous Fees," Bill Hardekopf, Sept. 20, 2013

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