TransUnion has released new data that indicates consumers made $72 billion more in payments on their credit cards than purchases between the first quarters of 2009 and 2010.
The reason this is newsworthy is because this occurred during a time when it was believed lower credit card debt was being driven primarily by credit card charge offs.
“Many people in the financial services industry believe charge-offs have been the leading factor in declining credit card debt since the start of the recession,” said Ezra Becker, vice president of research and consulting in TransUnion’s financial services business unit. “In fact, some have stated that charge-offs account for the entire change in card balances over the past two to three years. In reality, the dynamic is more complex. Our analysis shows that consumers have made a concerted effort to pay down their credit cards during these uncertain economic times.”
We can only hope that people have found a way to better make ends meet during these tough times and are aggressively digging themselves out of debt.
“This reversal is even more profound when you consider that alternative forms of revolving credit, e.g. home equity lines of credit, were far more accessible in 2004 than in 2009. So while charge-offs have played a major role in lower credit card debt levels, it was not the only factor. Consumers were also paying down their debt across the risk spectrum,” added Becker.
This trend also was supported by an IBOPE Zogby International survey commissioned by TransUnion in early June, 2011. Approximately 55% of consumers said they chose to use their debit card over their credit card more than half the time when making daily purchases. In fact, 47% of respondents said they did so more than three out of four times. Another 8% of respondents said they chose to use their debit card over credit card 51-75% of the time.
You are not alone. I'm here to help. There is no need to suffer in silence. We can get through this. Tomorrow can be better than today. Don't give up.
I can always use your help. If you have a tip or information you want to share, you can get it to me confidentially if you click here.