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Americans using the plastic more as economy improves

New numbers provide a key indicator that consumer confidence is starting to pick up as we head toward Christmas. According to credit reporting agency TransUnion, the average credit card balance per borrower ticked up in the period of July through September of this year when compared to the same period last year. But the increase in average credit card debt could mean that more Americans will need to file for bankruptcy if they can't keep their spending under control.

The average credit card balance ticked up by 4.9 percent in 2012 to $4,996. The amount of people who are more than 90 days late on credit card payments also slightly increased, which may indicate that more Americans are feeling comfortable taking on new debt again.

The recession had caused many Americans to cut back on borrowing in order to pay off existing debt. But the steady improvement of the economy indicates that many consumers are feeling more comfortable spending money again.

And banks are again feeling more comfortable lending to borrowers who are considered risky. According to TransUnion, new credit cards issued increased by 3.1 percent in the second quarter of 2012 when compared to the same period in 2011. And of those new accounts, 29.1 percent were issued to borrowers who were considered "nonprime," meaning they had a credit score of less than 700.

With more people wanting to spend money again, banks are aggressively competing for new business. But what some borrowers need to remember is how important it is to effectively budget. While it may seem enticing to break out the plastic to finance a lot of Christmas present purchases, remember that the debt eventually has to paid off.

Source: Associated Press, "Average US credit card debt per borrower up in 3Q," Alex Veiga, Nov. 19, 2012

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