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According to the article I read, the two credit card providers that got the most benefit from this spike were Discover Financial Services (the Discover Card people) and American Express.
The losers here were, of course, the people who were forced to take on even more credit card debt. While no one knows for sure what caused this increase in credit card spending, it is believed that it was mostly due to the fact that many more consumers are being forced to use their credit cards for everyday expenses, instead of for big-ticket or luxury items. Again this is only speculation but it is likely linked to the fact that jobs and income growth have been so weak.
If you've had to run up your credit card debt
If yours is one of those families that have had to pile up even more credit card debt in order to just pay for everyday expenses such as groceries, gasoline and the occasional movie, you may be getting desperate to do something about it. And there is help available. Three of the most popular ways to get debt relief is through consumer credit counseling, debt settlement and a debt consolidation loan.
The pluses and minuses of credit counseling
Like many things in life, all three of these alternatives have their pluses and minuses. For example, a consumer credit counseling agency can work with your creditors to develop a payment plan that can get you out of debt in four to five years. However, if you're looking to reduce your monthly payments, credit counseling isn't for you. That's because the payment plan the agency creates for you will probably call for a consolidated payment that will be about the same as the total of your minimum monthly payments. In other words, if your minimum monthly payments add up to $1,400, your consolidated payment to the credit-counseling agency will probably be $1,400 or more.
Debt consolidation loan - pros and cons
A debt consolidation loan can help you reduce your monthly payments, as you will have anywhere from five to seven years to pay back the money. You'll be moving all of your unsecured debts (credit cards, personal loans and medical bills) onto just the one loan, so will need to write only one check a month –just as you would with consumer credit counseling.
Debt consolidation loans also have some disadvantages. For one thing, you're not reducing your debts; you're simply moving them from one set of creditors to another. And second, debt consolidation can encourage you to continue poor spending habits. For example, if you exchange the equity in your home for money to pay off your credit card debt quickly, you could very easily end up with a much longer mortgage term and be piling up new debt.
The good and bad of debt settlement
Many Americans are turning to a third option called debt settlement. The major benefit of debt settlement is that it is the only known way to get your debt reduced–often to a fraction of what you owe. This can help you get out of debt in as few as 24 to 48 months. Plus, you will have a far more affordable monthly payment.
The downside of debt settlement is that it will definitely affect your credit rating. The credit card companies will not negotiate until you have missed at least five or six months’ payments. This will be reported to the three credit bureaus and will definitely have an adverse affect on your credit score. However, it won't have as bad an effect as the “nuclear option” of filing for bankruptcy.