Texas was invincible, or so we thought. As most Americans struggled, Texas' economy and it's people continued to flourish for the most part, until recently. A local credit counselor says now it's the hard core middle class feeling the effects.
"Now they're getting hit on the reduction of income level, add to the cost of household expenses, gasoline, electricity, food, if you have children it's much more,” says Consumer Credit Counselor Ernesto Aguilar.
While credit cards have been a lifesaver for many during a period of financial crisis, that mounting debt often comes back to haunt people. And now with the nature of the economy, people are really being forced to pinch pennies on everyday necessities and some are even struggling to pay the very minimum on their credit cards.
One would think with the financial struggles so many are experiencing, more would be inclined to charge it in order to get by. But believe it or not, that's not quite the case, at least not according to the clients who are coming into Consumer Credit Counseling Services.
Aguilar says people are actually more aware of the reality of this recession and are putting the credit cards down because they know they can't as easily payback what they've charged.
"We have seen a drop in the average debt outstanding from the clients coming in to see us. Previously, just last year, we were seeing 68 to 86-thousand in credit card debt. These days we're seeing an average of 20 to 30-thousand,” says Aguilar.
The credit card responsibility, accountability and disclosure act has also played a huge role Aguilar says. People are more aware of the financial effects of that lingering debt. The first phase that went into effect in mid 2009 showed card holders just how long it would take to pay off their card if only paying the very minimum amount as interest accrues. The final phase, which went into effect in mid 2010, stopped credit card companies from raising a card holder interest rates for no reason and gave card holders an opt out period if their rate was raised for a valid reason.
Since the economy is shaky right now, the major plunge in credit card use is not likely, but Aguilar says, for the first time, in a long time, many people are taking their debt a little more seriously and not charging so recklessly.