Debt Consolidation: The Most Popular Use of Personal Loans |

What’s the perfect recipe for debt consolidation companies hoping to see their business increase? How about consumer spending rising faster than income? That’s exactly what’s happening now, and it could mean an increase in future profits for debt consolidation lenders. After all, consumers can only increase their spending so much while their incomes remain largely stagnant. Eventually, that kind of spending pattern is going to catch up with them, resulting in high credit card bills. When that revolving debt gets high enough, many consumers will turn to high-interest-rate debt consolidation loans as a way to control their spiraling credit card debt.

Intriguing Numbers

The U.S. Department of Commerce released some interesting numbers charting the spending patterns of consumers in March. According to the department, U.S. consumer spending was up 0.5 percent in March. That’s more than the country’s pre-recession peak, which was set in November of 2007. At the same time, incomes in March rose just 0.2 percent. This, of course, means that spending rose faster than did incomes, never a sign of sound financial management. The country’s personal savings rate fell to 2.7 percent. That’s the lowest that number has stood since September of 2008.

Forgotten Lessons?

This all begs the question, have consumers already forgotten the lessons of the Great Recession? During the economic slowdown, the federal government actually wanted consumers to resume some of their previous free-spending ways. That’s what was behind all those stimulus packages. The goal was to have consumers help spend the country out of the recession. That didn’t happen, but the country is now working its way out of its economic doldrums the natural way. Consumer confidence is steadily increasing, leading to consumers who aren’t as nervous about spending their dollars. During the recession, though, consumers socked their money away, helping to significantly boost the country’s overall savings rate. It appeared that consumers had learned just how important saving was. Now, though, the Commerce Department numbers seem to indicate that it’s a lesson consumers have largely forgotten.

A Debt Consolidation Formula

If consumers continue to overspend, it will be little surprise if debt consolidation companies see their business increase. After all, there’s only so many months that consumers can spend faster than their incomes rise before they’ll eat through their savings and start running up their credit card bills. Of course, we’ll have to wait and see what happens in the coming months. But if consumers show more evidence that they’ve returned to their old spending habits, don’t be surprised to see a sudden surge in debt consolidation loans.