Unemployment rates across the United States continue to rise bringing even greater hardship to increasing numbers of American citizens already dealing with high credit card debt. The nation’s unemployment rate is currently at the 26 year high of 9.8%. Over 7 million jobs have been lost since the recession began in December, 2007. Some agencies are reporting that unemployment rates could rise to over 10% before there are any signs of improvement.
Even though they may have planned on paying down credit card debt and limiting personal spending, it has been too little, too late for far too many American citizens who have suddenly found themselves out of work. Most people in the United States are not able to maintain an emergency fund that will cover the expenses along with a debt reduction program in the event of income loss. In fact, with the recent economic climate, the existence of an emergency fund may not exist for many of the newly unemployed.
It is obvious that with a loss of income attention will be given to high priority bills such as housing, utilities, groceries before it is given to debt reduction. Beside losing the ability to pay down debt, many of the newly unemployed will be forced to use credit cards to pay their basic expenses, increasing the debt that they were previously trying to pay down. The result will be that there will be more credit card and unsecured credit delinquencies that damage personal credit scores and the battle against debt will worsen before it gets better.
Tags: Personal Debt, Unemployment
