Credit Card Debt Declines Again

What's Hot


2 Types of Black Marks Might Vanish From Your Credit File SoonBorrow

5 Surprising Benefits of Exercising Outdoors in WinterFamily

6 Ways the Obamacare Overhaul Might Impact Your WalletInsurance

7 Dumb and Costly Moves Homebuyers MakeBorrow

Obamacare Replacement Plan Gets ‘F’ Rating from Consumer ReportsFamily

Beware These 12 Common Money MistakesCredit & Debt

17 Ways to Have More Fun for Less MoneySave

This Free Software Brings Old Laptops Back to LifeMore

30 Household Uses for Baby OilSave

Nearly Half of Heart-Related Deaths Linked to These 10 Foods and IngredientsFamily

10 Ways to Save When You’re Making Minimum WageSave

Boost Your Credit Score Fast With These 7 MovesCredit & Debt

7 Painless Ways to Pay Off Your Mortgage Years EarlierBorrow

Considering a Fixer-Upper? 15 Ways to Avoid a Money PitGrow

This Scam Now Tops ID Theft as the No. 2 Consumer ComplaintFamily

6 Stores With Awesome Reward ProgramsFamily

6 Healthful Treats for Your DogFamily

6 Ways to Save More at Lowe’s and The Home DepotSave

20 Tips for Buying a Home in the Best Location, Location, LocationGrow

30 Awesome Things to Do in RetirementCollege

New Study Ranks the Best States in the U.S.Family

6 Overlooked Ways to Save at Chick-fil-AFamily

The Most Sinful City in the U.S. Is … (Hint: It’s Not Vegas)Family

House Hunters: Beware of These 6 Mortgage MistakesBorrow

Ask Stacy: How Do I Start Over?Credit & Debt

Secret Cell Plans: Savings Verizon, AT&T, T-Mobile and Sprint Don’t Want You to Know AboutFamily

10 Ways to Save When Your Teen Starts DrivingFamily

The True Cost of Bad CreditCredit & Debt

You’ll Soon Pay More to Shop at CostcoSave

Marijuana Stocks Flaming Out Under TrumpFamily

21 Restaurants Offering Free Food Right NowSaving Money

If you've been paying down household debt during these tough economic times, you're in good company. Nearly 40% of consumers say they're using more cash and less credit than they were a year ago.

Editor’s Note: This post comes from partner site LowCards.com.

The Federal Reserve released a monthly report on Wednesday that shows credit card debt continues to decrease at a significant rate.  Revolving credit, which is primarily credit card usage, fell for the 17th consecutive month in February, declining at an annual rate of 13.1%. The $858.1 billion in revolving credit represents a $100 billion decrease since the fourth quarter of 2008.

“Consumers seem to be taking some steps to reduce their credit card debt, some of it out of necessity, some voluntarily. They are using cash and debit cards more often and charging less on their credit card, possibly due to the APR increases they have seen. But significant actions by the issuers have also contributed to this decrease,” says Bill Hardekopf, CEO of LowCards.com and author of The Credit Card Guidebook.

Nearly 42% of consumers are using more cash than they were a year ago, according to a survey by the consulting firm Market Strategies International. A study by BIG Research in January showed that 30.5% of the respondents said they would pay with cash more often, up from 23.0% a year earlier.

Debit card usage is increasing. According to their annual reports, MasterCard’s debit card usage in this country increased 10.5% in the fourth quarter of 2009 versus year ago levels, while Visa reported a 17% increase.

But the actions of issuers have also helped decrease credit card debt.

“To protect themselves from future risk, issuers have closed accounts, cut the credit limits on millions of customers, and have become much more selective on which customers receive approval on a credit card,” says Hardekopf.

There are signs that steps taken by issuers to reduce risk may be working.

Bank card defaults fell to 4.39% in the fourth quarter from 4.77% in the prior quarter, according to a report released this week by the American Bankers Association.  The drop in defaults is not by accident. In a recent letter to shareholders, Jamie Dimon, CEO of JP Morgan Chase, said, “the industry as a whole reduced limits from a peak of $4.7 trillion to $3.3 trillion. While we believe this was proper action to protect both consumers and card issuers, doing so in the midst of a recession did reduce a source of liquidity for some people.

“Ultimately, however, the change may make the card business a more stable and better business.”  He also said that in the future, Chase will have to reduce risk in light of the new regulations and they will “no longer be offering credit cards to approximately 15% of the customers to whom we currently offer them.”

He admitted that Chase reduced limits on credit lines and canceled credit cards for customers who had not done business with Chase over an extended period.

Link to Jamie Dimon’s letter to JP Morgan Chase shareholders: http://media.ft.com/cms/1d11280c-3d20-11df-b81b-00144feabdc0.pdf

Link to the latest Federal Reserve Consumer Credit statistics: http://www.federalreserve.gov/releases/g19/Current/

Stacy Johnson

It's not the usual blah, blah, blah

I know... every site you visit wants you to subscribe to their newsletter. But our news and advice is actually worth reading! For 25 years, I've been making people richer without making their eyes glaze over. You'll be glad you did. I guarantee it!

💰🗣📰

Read Next: 7 Things Worth Paying More For

Check Out Our Hottest Deals!

We're always adding new deals and coupons that'll save you big bucks. See the deals to the right and hundreds more in our Deals section.

Click here to explore 2,019 more deals!