One of the main questions for which people are looking for answers is if the great recession that started a couple of years ago is now behind us.
For a number of years, consumers spent more than they earned and this sent the world economy spiraling into oblivion. The debt incurred by Americans showed a record high and the savings plummeted beyond expectations. And, by the time people realized the after effects of spending beyond their means, recession had hit the world.
The good news, however, is that the glimmer of hope has now begun to crop up in the minds of people. The delinquency rates on credit cards dropped drastically in the month of March giving banks a reason to smile after months of misery and huge financial losses. The savings rate showed an increase of 3.6% which brought back a smile to the face of the customers. As per the information from American Express, a lot of consumers are now making their monthly payments on time and are showing signs of clearing off debt soon. Over the last twelve months, the credit card debt in the United States has reduced by $100 billion.
Daniel Henry, the Chief Financial Officer of American Express told investors that the banks are seeing a reduction in the existing loan balances. He also went on to say that this is in line with the current trend in the financial sector.
Despite this, there are a few financial experts who are still apprehensive about the improvements taking place. Banks and financial institutions have shut their doors on people with poor credit reports, thus, reducing the outstanding credit amount. The write offs on the credit cards showed a record high in the first quarter of this financial year which is when the banks wrote off bad debts. The financial experts say that the unemployment rates that are still high and a minimal gain in the income will not help customers much in wriggling out of their current debts.
John Ulzheimer, credit.com`s Consumer Education President, said that the one thing we have learnt from the nightmare we experienced is that it is the financial institutions that are partly responsible for the problems they are facing at the moment.
However, the changing trends clearly reveal that the consumers have learnt this lesson as a result of the crisis they faced until recently.