Credit Card Debt Likely Down For Post-Holiday Period

Earlier this month, Experian, a company that helps businesses manage credit risk, published the results of a survey of consumers’ plans for holiday spending. It found that only 21 percent of respondents intend to carry the credit card debt they acquired this holiday season beyond January 2010. That compares with 26 percent of those who were asked the same question about 2008/09 this time last year.

Of those who do plan to carry holiday spending credit card debt beyond January, 24 percent plan to have it all paid off within one or two months, compared with 18 percent past year.

Less Debt, More Saving

The Experian survey may be an early indicator of a new, more mature attitude toward money that seems to be spreading rapidly across the nation. And certainly, the report is not the only reason to infer such a change in consumer attitudes to debt and savings.

The Commerce Department’s Bureau of Economic Analysis released new data Wednesday that showed that personal savings amounted to $525.1 billion in November, compared with $516.7 billion in October. The November figure was 4.7 percent of disposable personal income.

And when comScore, a company that specializes in digital marketing intelligence, asked consumers in October whether they were, compared to a year ago, cutting back on their spending owing to concerns about the economy, 76 percent answered in the affirmative.

Credit Card Use to Change?

The comScore report, which was published December 14, asked more detailed questions about consumers’ credit card use. For example, 65 percent of respondents said that they have changed the way they pay for items because of economic concerns. A follow-up question produced the following breakdown of changes in how people pay:

• 42% were more likely to use cash
• 40% were more likely to use a debit card
• 13% have begun to consolidate spending to fewer credit cards

Changed Credit Card Terms and Conditions Resented

Half of all those surveyed by comScore said that an issuer had changed their credit card terms and conditions in the previous year. Of those:

• 53% had their credit card rates hiked
• 26% had a reduced credit limit
• 21% had additional fees imposed
• 17% had their rewards program amended
• 14% had an increased annual fee
• 10% had a credit card account closed

The researchers commented:

As changes made by issuers to consumers’ accounts have caused many individuals to alter their credit card usage patterns, they have also contributed to a loss of confidence in their issuer, a more harmful long-term effect for the industry. An overwhelming 54 percent of people who were aware of some change said that these changes have worsened their perception of their credit card issuer.

Credit Cards Not All Bad

A credit card offers a consumer unique benefits, including ease of use, rewards, convenience, control, and–of course–a line of credit. And few Americans are voluntarily cutting up their cards.

What this sort of research shows is the importance of having the right card for your own particular needs. And finding that involves shopping around and comparing credit card deals.

Published 12/27/09 (Modified 04/23/12)