Saturday, January 08, 2011

Credit card borrowing down for 27th month is news our budgets can live with

The Federal Reserve reported on Friday that consumer borrowing rose in November for things like cars and college loans. However, the Fed also reported that people are actually saving more and spending less on unsecured credit, meaning credit cards.

We, the people, borrowed 6.3 percent less in November on our credit cards. It's the 27th straight month that consumer borrowing declined.

An economist the the Bank of Tokyo-Mitsubish said consumer borrowing was down 2.2 percent in November, from November 2009.

"Household attitudes toward the use of credit cards soured during the Great Recession and it's going to take time before many people get comfortable with using them again," Ellen Beeson Zentner told the Associated Press in a story release Friday.

"We have a long way to go before credit normalizes," she said.

For me, putting the brakes on consumer credit IS the new normal. For one thing, the credit card issuing banks have not returned the interest rates they charge to "normal" either. Whether it's their intention or not, they taught me that I had far too much credit and had tapped far too deeply into it, and when the banks increased interest rates, it wiped out any discretionary income. So, when I get out of this mess, I don't ever want to get back into it again.

So, don't count on me, and people like me, to do more to fuel the economy. The available funds I have are not increasing.

Sure, some of us will undoubtedly start using credit cards again. But not all of us. For those of us committed to paying only for things we can afford now, this is the new normal, and the banks better get used to it.


Gene said...

The mindset of the banking industry hasn't changed a bit, eh wot?
"We have a long way to go before credit normalizes," tells us much about Zentner. The "we" could mean the U.S. economy, but it could also mean banks.

Which do you suppose she wants us to infer?

Not the Freudian slip, I betcha.

friend said...

It wasn't me, but my ex-wife who drove me into a monster hole with credit card debt. Years ago I decided to cut up all my credit cards and never charge a thing again. Best decision of my life. People, if you can't pay for it in cash, then you don't need it. I am glad the country is weening themselves of the criminal credit card companies. They are horrible, and will destroy your life.

The End Debt Daily