Consumers Across the Nation Continue to Pay Down Credit Card Debt
It looks as if the trend of responsible credit card use is still going strong, if recent statistics are any indication.
The Federal Reserve recently released figures which show that consumers across the nation continue to pay down their credit card debt. In fact, August marked the 11th, consecutive month that borrowers reduced their credit card debt.
According to the Federal Reserve, revolving credit card debt among the nation’s consumers dropped by an annual rate of 13.1 percent in August. Non-revolving credit card debt (i.e. student and auto loans) also dropped by annual rate of 1.6 percent as of August.
The Furor Surrounding the Impending Credit Card Legislation
It seems as if the backlash from the new credit card legislation has deeply affected consumers. In particular, many creditors have begun changing their terms in anticipation of the new credit card legislation set to go into effect next February, and many consumers are simply fed up with these changes.
Some of the changes that have many consumers cutting up their credit cards in favor of cash include interest rate hikes and credit limit cut backs.
In addition, many consumers, it seems, have just begun an era of responsible spending due to the recession and lack of new jobs. As consumers watch the fallout from the credit and housing crisis, they realize that smart spending can’t come quick enough.
A new Way of Living
As a result, many consumers are paying down their debt and concentrating on responsible spending.
A clear sign of this new way of consumer thinking is the personal savings rate, which saw levels jump to 4.2 percent; a far cry from the near-zero amount just a few years back.
Saving more and spending less seem to be the trend as of late, and for good reason. As more and more creditors change the rules when it comes to consumers’ credit cards, the more likely consumers will be to abandon their credit cards in favor of wise spending and more saving.
Now the ball is the in the creditors’ courts, so to speak. The only way to lure consumers back to using credit card is to, once again, offer them competitive interest rates and fair terms and conditions.
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