AMHERST, Mass. (WWLP) - The Federal Reserve says consumers are getting into more debt. May's monthly gain surged to $17.1 billion; making it the largest monthly gain in credit card debt since before the economic downturn, said the government agency on Monday.
"I think that most people are trying to cut back using their credit cards as much as possible, but the economic times make it difficult to go into debt and pay it back," said Keith Hollingworth in Amherst Tuesday afternoon.
Hollingworth told 22News he believes the sluggish economic recovery is making it easier for consumers to bust out a credit card. All reasons why Will Carswell, of Hadley, hasn't had one in years, "I've had credit cards in the past, but they slap you with fees, and I would prefer to not have monthly debt to pay," said Carswell.
But experts at UMass Amherst's School of Management say when consumer borrowing goes up, so does confidence in spending. And that could in turn stimulate the economy.
"Spending more using credit actually does help create jobs, it does help the economy as long as it doesn't get to a point where it's not sustainable," said Professor of Finance Ben Branch .
Despite the gain, the Federal Reserve says credit card use is still below where it was before the recession. Something Branch attributes to lenders being more cautious; by choosing not to extend credit lines for consumers who can't pay it back.