Consumer Debt Continues to Decline

Note: The following article is posted courtesy of our friends at LowCards.com

Data released this week by the Federal Reserve shows that the consumer debt continues to decline. The Federal Reserve Consumer Credit report reveals that credit card debt fell in October for the 13th consecutive month. Revolving credit, the majority of which is credit card debt, decreased at an annual rate of 9.3% in October. It has fallen $88 billion since October of 2008, from $976.1 billion to $888.1 billion.

Another credit card statistic shows the delinquency rate is also dropping. The delinquency rate, which shows loans that are 30 days or more past due, was 1.10 percent in the third quarter of 2009 and is expected to fall to 1.07 percent by year’s end. By December of 2010, TransUnion predicts that 90-day delinquencies will drop to 1.04 percent.

“The overall decrease of credit card balances is a very good sign for consumers. Perhaps they have taken charge of their credit card and are paying down some of their debt. Another factor seems to be they are upset at the very high interest rates and fees that credit card issuers have put on their accounts throughout 2009 and are shying away from using their cards,” says Bill Hardekopf, CEO of LowCards.com and author of The Credit Card Guidebook.

According to the National Retail Federation’s 2009 Holiday Consumer Intentions and Actions Survey, only 28.3% of holiday shoppers plan to use credit this year compared to 31.5% a year ago, a 10% decrease. This is further underscored by a recent USAA survey, which showed more than half (55%) of the respondents are planning to avoid charging their holiday purchases. Among the shoppers who plan to use their credit cards, 74% plan to pay off their balance immediately so that they do not pay interest.

“But credit card issuers themselves may be responsible for much of this drop in revolving credit,” says Hardekopf. “Issuers have closed many credit card accounts and have tightened approval rates, making it harder for some consumers with marginal credit to qualify for a credit card. In addition, credit card issuers have cut the credit limits on many customers.”

According to a FICO study, credit card issuers cut limits for an estimated 58 million cardholders for the twelve months ended in April 2009. Issuers are continuing to cut limits to reduce their risk of lending money.

“Right now, consumers aren’t consuming and lenders aren’t lending like they used to,” says Hardekopf.

Disclosure: The information you read here is always objective. However, we sometimes receive compensation when you click links within our stories.

Read Next
8 Amazon Picks Under $30 for Coffee Lovers
8 Amazon Picks Under $30 for Coffee Lovers

We’ve brewed up a list of amazing Amazon products that are sure to perk you up.

How to Stop Living Paycheck to Paycheck in 8 Steps
How to Stop Living Paycheck to Paycheck in 8 Steps

Does it feel like your paycheck is gone the moment you get it? You can break that vicious cycle.

5 Ways Anyone Can Save on Out-of-Pocket Health Care Costs
5 Ways Anyone Can Save on Out-of-Pocket Health Care Costs

Here’s how to lower your health care costs without skimping on care.

The 3 Worst Money Mistakes You Are Making at the Gas Station
The 3 Worst Money Mistakes You Are Making at the Gas Station

Beware these cash-guzzling missteps when you stop at any gas station.

9 Items Under $25 That Will Keep Your House Clean
9 Items Under $25 That Will Keep Your House Clean

We’ve rounded up some of the best products for cleaning your bathroom, kitchen and every other room.

View this page without ads

Help us produce more money-saving articles and videos by subscribing to a membership.

Get Started

Most Popular
7 Kirkland Signature Items to Avoid at Costco
7 Kirkland Signature Items to Avoid at Costco

Even if it seems you save a bundle buying Costco’s Kirkland Signature brand products, they may not be the bargain they appear to be.

Am I Eligible for My Mother’s Social Security Benefit?
Am I Eligible for My Mother’s Social Security Benefit?

Can an adult daughter tap into her late mother’s benefit?

9 Things You’ll Never See at Costco Again
9 Things You’ll Never See at Costco Again

The warehouse store offers an enormous selection, but these products aren’t coming back.

3 Ways to Get Microsoft Office for Free
3 Ways to Get Microsoft Office for Free

With a little ingenuity, you can cut Office costs to zero.

This Surprise Factor Can Raise Your Risk of Dementia
This Surprise Factor Can Raise Your Risk of Dementia

Nearly half of U.S. residents may face this threat.

Organize Your Home With These 10 Thrift Store Finds
Organize Your Home With These 10 Thrift Store Finds

Resolve to be clutter-free in 2021 with these secondhand purchases.

11 Laws You Could Be Breaking Without Knowing It
11 Laws You Could Be Breaking Without Knowing It

Seriously? Fibbing about the weather is a crime? This and other little-known legal traps await the unwary.

Is This Treatable Condition Causing Your High Blood Pressure?
Is This Treatable Condition Causing Your High Blood Pressure?

Researchers say too many doctors are overlooking this potential source of hypertension.

13 Things Seniors Can Get for Free — or Almost Free
13 Things Seniors Can Get for Free — or Almost Free

There are many ways to get cheap or free services and goods after reaching a certain age.

These Are the 3 Best Used Cars You Can Buy
These Are the 3 Best Used Cars You Can Buy

These vehicles boast reliability, safety and long-lasting value.

21 Items to Cut From Your Budget That You Won’t Even Miss
21 Items to Cut From Your Budget That You Won’t Even Miss

Start off the new year by implementing these small-but-smart savings strategies. They’ll soon add up.

Internet Providers Can’t Charge You for This Anymore
Internet Providers Can’t Charge You for This Anymore

Starting this month, your ISP no longer can bill you for this fee.

Taking a Multivitamin? Here’s Why You Should Reconsider
Taking a Multivitamin? Here’s Why You Should Reconsider

A new study has bad news for the millions of Americans who spend money on multivitamins.

15 Painless Ways You Can Cut Costs in 2021
15 Painless Ways You Can Cut Costs in 2021

Follow these tips to save, so you’ll have money for things that really matter.

9 Small Expenses That Are Bleeding Your Budget Dry
9 Small Expenses That Are Bleeding Your Budget Dry

Keep more of future paychecks by eliminating these budget-busting unnecessary expenses.

11 Huge Retirement Costs That Are Often Overlooked
11 Huge Retirement Costs That Are Often Overlooked

Does your retirement budget account for all of these costs?

7 Tricks to Cleaning Your Bathroom Faster
7 Tricks to Cleaning Your Bathroom Faster

These tips can get your bathroom sparkling with little time and no elbow grease.

20 Amazon Purchases We Loved in 2020
20 Amazon Purchases We Loved in 2020

These practical products made everyday life a little easier last year — and will do so in the new year, too.

10 Times You’re Right to Be a Cheapskate
10 Times You’re Right to Be a Cheapskate

Clever shoppers can save money without sacrificing quality. Here is how to do it.

View More Articles

View this page without ads

Help us produce more money-saving articles and videos by subscribing to a membership.

Get Started

Add a Comment

Our Policy: We welcome relevant and respectful comments in order to foster healthy and informative discussions. All other comments may be removed. Comments with links are automatically held for moderation.