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Credit card debt falls again, despite growth of overall borrowing

It seems as though no one was untouched by the effects of the most recent economic recession. One of the major consequences of the recession is that consumer habits began to change: People became more hesitant to spend or take on more debt.

According to reports from the Federal Reserve, American consumers cut back on their credit debt in August, which marks the third consecutive month of the trend. In fact, the debt dropped by a total of $883 million. It seems as though this hesitancy to spend is a legacy of the recession.

Interestingly enough, consumers showed a willingness to assume more long-term debt. During the same month, overall consumer debt increased by $13.6 billion. Much of that growth in debt was fueled by people taking out auto and student loans. Although these loans are typically bigger than borrowing done on credit cards, payments spread out over a long period and have lower interest rates.

Of course, some are speculating about what this shift in borrowing means. This is especially true considering that credit card debt has plummeted nearly 17 percent from its peak in 2008, months after the recession began. Some believe it will hinder economic growth, as consumer spending isn't at the levels many would like it to be.

Whatever the case, many people are still dealing with the effects of the recession and gradual recovery. As many are still unemployed or underemployed, they may be struggling to make ends meet from month to month. People in this situation may be interested in a solution that provides lasting debt relief.

Source: USA Today, "Americans cut back on credit cards for 3rd month," Martin Crutsinger, Oct. 7, 2013

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