Consumer credit rose 7.7 percent in June

[Aug 5, 2011.]

 

Consumer borrowing in the U.S. rose $15.5 billion, or 7.7 percent, to $2.446 trillion in June, the highest monthly increase in four years, according to the Federal Reserve. Revolving debt, which includes credit cards, rose to $798.3 billion from $793.1 billion in May. Non-revolving credit, which includes personal loans and student loans, jumped to $1.647 trillion

Stop relying on credit cards and loans

Many consumers are feeling squeezed as the U.S. grapples with a 9.1 percent unemployment rate, high gas and food prices and a stalled housing market. It's likely that a lot of people are turning to credit cards and loans just to pay for their daily living expenses. Here are some steps you can take to avoid relying on credit for household bills.

• Know what you're up against. It's a mistake to think you can fix any money woes without knowing what you're facing. Take time to list all sources of monthly income. Then list all of your monthly bills and amounts owed on debt.


• Put together a plan to make your income cover all expenses. If your income doesn't stretch, you'll either need to start cutting expenses or find a way to increase the money coming in each month.


• Debt loans can help but be cautious about borrowing money. Once you know exactly what you're facing, you may decide to get a debt consolidation loan. Consolidating debt only works if you make a real effort to pay off loan balances and other debt, and avoid running up new bills. You can begin comparing debt loans here.


• Consider asking for a debt settlement plan from creditors. If you've already fallen more than two months behind on your monthly payments, creditors may be willing to negotiate. If a deal is offered to settle a loan, you could end up reducing the amount owed significantly. Be cautious about signing up with debt settlement companies who make too many promises.


• Avoid quick loans from banks or payday lenders. Although these fast loans don't require a credit check, borrowing this way could end up costing you an exorbitant amount of interest that could soar past 300 percent. Payday loans trap many consumers in a cycle of debt they find very difficult to escape.

Borrowing loans responsibly

Borrowing money could get you through tough times, but it's important to have a plan for paying back the money. Look for alternatives to getting a loan if you're searching for a way to keep paying your bills.

 

About Author:

Francine L. Huff is a freelance journalist and the author of The 25-Day Money Makeover for Women. She has appeared on a variety of TV and radio shows.