A recent Federal Reserve data reveals that the US consumers have succeeded in reducing credit card debt over the past few years and they’re continuing to do so. In the last quarter of 2009, there has been the biggest dollar-value drop and the largest percentage drop in the credit card balances since 1968 and 1974 respectively. The report released on January 8, 2010, also reveals the fact that revolving debt that is, credit card debt, has fallen to $874 billion from a record increase of $975.2 in the month of September, 2009.
Probable reasons behind the reduction in credit card debt
A government data shows that the average US household has been able to eliminate about $1,874 credit card debt. According to the experts, consumers have become cautious about using revolving credit. Previously, they used to swipe cards for each and every purchase; but nowadays, they have become careful about spending money. Reports show that the credit card holders are now borrowing comparatively less from the credit card companies in order to fund their shopping.
So, it can be said that there has been a shift in the consumer attitude. They have become less optimistic regarding their ability to make a credit card purchase and pay back the amount later. Moreover, the consumers are also tying to manage their personal finance by spending less amount of money and saving more. They are also trying to reduce their amount of debt, as much as possible.
Will the consumers continue reducing credit card debt?
The above data and scenario may be a positive sign and the experts believe that the consumers will continue reducing credit card debt in 2010. However, James Chessen, the chief economist for the American bankers Association, has stated that unemployment may make it difficult for the consumers to further reduce debt as the family budgets have already stretched to the limits. It is true that the ongoing threat of unemployment has made the consumers more careful about shopping and spending money; at the same time, unemployment may also prevent them from paying off their bills on time.
However, experts are quite positive about the fact that the credit card debt will continue reducing in 2010 as well, as the consumers have learnt to save money rather than spending it. Moreover, the new Credit Card Act may make it difficult for most of the existing consumers to get access to revolving credit. So, it can be assumed that the consumers will continue reducing credit card balances in the forthcoming days.
Keyphrase: credit card debt
Description: Check out the probable reasons behind the reduction in credit card debt in 2009. Know whether or not the consumers will be able to reduce debt in 2010.
Reports reveal that the consumers have succeeded in reducing credit card debt in 2009. Check out the reasons and know whether or not they will continue doing so in 2010.
Recent reports reveal that the consumers have succeeded in reducing credit card debt in the last quarter of 2009. Know about the probable reasons behind it.
