The recent unemployment data had some piggy bank data with it. More people are using fewer charge cards, and using the cards they do use less as well. Individuals don’t see credit cards as the best source of instant cash loans anymore. People are also saving more than they used to. Recessions stall purchases of non-essential goods, which is somewhat counterproductive as so much of the US economy depends on consumer products.
Credit card use falls
The Wall Street Journal reports that credit card use is still trending downward for Americans. For some time now, people are using revolving credit (credit cards, credit lines at banks) less although non-revolving credit (like payday advances, mortgages, money advances, and student loans) is also diminished. Revolving credit use has fallen for the last 21 consecutive months. If this keeps up, even credit card execs are likely to need a payday loan.
Unemployment plays a large role
During recessions, people make less non-essential purchases. They especially can’t justify making purchases with anything other than money. Purchasing that new living room set on credit whenever you don’t need it and making minimum payments for decades just is not as attractive. The national savings rate, on the other hand, went up. The US Department of Commerce showed a rise in savings, as it’s up to 6.4 percent for June, up from 6 percent in April.
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 financial security is the goal you have in mind, there’s no have to go further into debt that you don’t need, unless you are getting a loan to consolidate and get some debt relief.
Additional reading
Wall Street Journal
http://online.wsj.com/article/BT-CO-20100806-715007.html
