Consumers scaled back their credit card spending considerably during and also immediately following the recent recession, but as the economy continues to improve, they're starting to use those accounts en masse once again.
In the last several months, consumers have been reaching into their wallets once again and spending more on their credit cards, according to a report from MSNBC. The latest data shows that consumers are feeling more confident about their financial situations and the economy as a whole, and spending is on rise commensurately.
However, even though many are feeling better about their financial standing, credit card use may be on the rise largely due to increasing prices for necessities like food and gasoline, the report said. Spending on fuel rose 3.6 percent during the last month, compared with just 0.8 percent across the entire economy, but experts also say they think consumers will be able to handle the increase. The national unemployment rate has fallen to 8.3 percent in the last few months, from as high as 9 percent in September, and payrolls are expected to continue increasing throughout the year.
"The bad news is that pump prices will start approaching the $4.15 [or] $4.20 per gallon range by Memorial Day," Chris Christopher, a senior economist at IHS Global Insight, told the news station. "The good news is that a relatively stronger job and stock market are assisting in holding up consumer spending and confidence."
Consumers are using two methods to pay for the increased spending: Tapping their savings accounts - or at least reducing their contributions to them - and putting more debt on their credit cards, the report said. The most recent statistics on how much of their disposable incomes households nationwide are putting into savings show that the figure recently dipped to just 3.7 percent, the lowest level since March. Meanwhile, the amount of revolving debt - the type most commonly associated with credit cards - has risen 8.3 percent since bottoming out in May 2010, indicating that consumers are once again feeling better about handling any debt they incur.
However, studies have also found that while the amount of credit card debt being carried is on the rise, the number of consumers who borrow more often but pay down their debt in full every month is also increasing considerably.