Tuesday, November 30, 2010

More than 8 Million Drop out of Credit Card Use

According to an analysis from credit reporting agency TransUnion about 8 million taxpayers stopped using credit cards over the past year. Currently, 62 million Americans have a card featuring a MasterCard, Visa, Discover, or American Express logo compared to 70 million last year. This represents an 11% decline.

Breitbart.com reports

    The Chicago Company found that consumers in the subprime category, or those with low credit ratings, were believed to be without cards mostly because they were shut down by banks after payments fell behind or balances were written off.

    "One can quite reasonably infer that's not voluntary," said Ezra Becker, vice president of research and consulting in TransUnion's financial services business unit. Banks have written off record amounts of credit card balances in recent years.

    But a significant portion of the decrease in card usage reflects decisions by cardholders to stop using credit, Becker said. "They're simply either not purchasing as much or paying down balances."

    Many of these individuals may have shifted to using debit cards. In the past several years the use of debit cards has grown steadily and now surpasses credit card use in both the number of transactions and dollar volume. Interest rate increases by credit card companies and reduced credit lines have contributed to that trend.

Read more here

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