The recent unemployment data had some piggy bank data with it. Fewer individuals are using their credit cards this year, and individuals are using them less. Individuals don’t see credit cards as the best source of instant payday loans anymore. Americans are saving more than they used to. Consumer goods are a huge part of the economy, and purchasing non-essential goods has dropped off which is counterproductive to the economy.
Credit card use falls
The Wall Street Journal reports that credit card use is nevertheless trending downward for Americans. Revolving credit like charge cards, unlike things like payday advances, cash advances, or mortgages, has been declining for some time. In fact, the use of revolving credit has dropped each month for the past 21 months consecutively. At this rate, the credit card corporations are likely to need a payday advance themselves.
Unemployment is a large part of it
During recessions, people make less non-essential purchases. They especially can’t justify making purchases with anything other than money. If an individual makes a large purchase like a new refrigerator or living room set on a credit card, making minimum payments for the next 50 years is not as palatable. The national savings rate, on the other hand, went up. In April, the national savings rate was 6 percent, and for June, it’s up to 6.4 percent, according to the US Commerce Department.
Less shopping with less security
If you do not know you’ll be stable by the end of the year, there’s no point in using credit for making large purchases. If you want to get out of debt and have some security, it makes no sense to incur further debt to do it, unless of course you can get a debt relief loan with an rate of interest that’s manageable.
Wall Street Journal
http://online.wsj.com/article/BT-CO-20100806-715007.html
No comments:
Post a Comment