Credit card use in America continues to drop at an unprecedented rate. In September, credit card debt, dropped 13% again, after falling 13% in August. The nine-month decline is the most since the Federal Reserve began keeping records.
The falloff is a result of continued high unemployment and tightened bank lending standards. In addition, credit card delinquency rates are rising, according to Lowcards.com.
Even with the drop-off, consumers still owe $889.4 billion, or $7,537 per household. (Source: Federal Reserve, G.19 Release, November 7, 2009)
Loans for auto, furniture and consumer electronics fell 3.7%. This non-revolving debt is $1.567 trillion, or $13,279 per household. Note: This estimate is based on 307.6 million people in the U.S., an average of 2.6 persons per household, and 118 million households. (Source: U.S. Census, Population Clock; Average Household Size)
The availability of credit for personal consumption drives 70% of the U.S. economy. Declining credit purchases will lower the GDP growth rate.
What It Means to You
A recession caused by declining credit card debt is a good time to reduce your own financial vulnerability. Consult with your financial planner and develop ways to reduce your own credit card debt....and avoid becoming a statistic in the Federal Reserve's G-19 report next month.
Related Articles
- Chicago Federal Reserve web site How to Budget
- About.com Guide to Credit, LaToya Irby Making a Plan to Reduce Credit Card Debt
- About.com Guide to Beginners Investing, Joshua Kennon More Resources for Reducing Credit Card Debt
(Photo Credit: Scott Barbour /Getty Images
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