American Credit Card Debt Decreases
According to Synovate, credit card spending is up again throughout the United States.
In fact, the latest data shows that credit card consumers spent an average of $1,559 in 2010; that’s an increase of 6 percent over 2009. These numbers are indicative of those in 2008 – the last time consumers spent before the recession took hold. In 2008, credit card consumers spent an average of $1,701 on their credit cards.
Credit Card Debt Falling to Lowest Level in Eight Years
A related study by TransUnion also has good news to report: credit card debt has fallen to its lowest level in eight years. The average consumer credit card debt has averaged $4,951 over the last three months, which is a decrease of nearly 13 percent from 2009’s average of $5,719. The last three months, in fact, were the first time the average consumer credit card debt dipped below $5,000 since the first quarter of 2002.
Many economists are quick to point out, however, that the decrease in credit card debt has little to do with consumers having more money; instead, it is likely that consumers are making much more of an effort to get out of the debt they are in because of high interest rates.
Rising Credit Card Interest Rates
According to Synovate, the average interest rate on a credit is now 14.7 percent, compared with 13.1 percent this time last year. The spike in interest rates is likely a result of the CARD Act that was recently enacted.
In short, it seems that credit card companies are getting their money one way or another. If they are limited or prevented from charging certain fees, they will certainly find a new way to bring in the all-might dollar; and that just may be in the form of higher interest rates.
In addition, many banks and credit card companies scrambled to raise interest rates before the CARD Act went into effect, given the strict regulations the government put on companies regarding notice of interest rates increases.
Another reason the data is coming back showing a decrease in credit card debt is also likely because of the many bankruptcies and other debt write-offs that have taken place over the last year. This type of debt reduction or elimination is not included in these studies.
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