SAN FRANCISCO--(BUSINESS WIRE)--Financial research firm Javelin Strategy & Research (www.javelinstrategy.com) released today its latest report on credit cards and consumer spending, which shows that Americans are cutting back on credit card use and having difficulty paying off balances. The report indicates conservative spending behaviors as a result of the economic downturn and the ramifications of the mortgage crisis, soaring fuel costs and rising food prices."The sharp decline in credit card spending challenges the popular belief that Americans are charging basic goods in order to sustain their quality of life," said Jim Van Dyke, president of Javelin Strategy & Research. "Consumers are making deliberate cutbacks like shopping at superstores, eating out less and watching what they charge. We believe this is because most people have already been impacted by the downturn or they're anticipating that we haven't seen the worst of it. It's very cautious behavior."
Javelin analysts also found significant cutbacks among credit card issuers. Seven out of ten issuers have reduced efforts to solicit new customers and 62% have cut back the lines of credit they make available to consumers.
"From declining consumer use, rising risk levels and possible new merchant fee legislation, the credit card industry is taking several hits right now, which could have unintended consequences on Americans," said Bruce Cundiff, director of payments research and consulting at Javelin Strategy & Research. "If the economy continues to decline, consumers will likely be forced to turn to credit but find it unavailable when they need it most."
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Not using the cards at all (I would pay the balance at the end of the month anyway) and switching to cash is such a good idea. My friend Scott got me on the cash-only plan for most purchases and it's amazing how much less you spend on stuff you don't really need when you pay with cash. Seriously, try it.
Cut'em up America!
You will have to explain to me how you are on a cash only plan. My wife and I do it for eating out money, but I find it would be difficult for most purchases. Do you have a bunch of enevlopes or something?
Agreed about cutting up credit cards..I have several friends that are in major credit card debt. And those b'trds at the credit card companies keep offering free balance transfers, which sounds good in the short run (assuming you can pay the balance before the interest starts accruing) but sadly most people keep spending away and look for the next card to transfer to, to avoid interest. This shell game doesnt last forever.
Love that South Park episide where the chinese kid makes fun of Americans by holding his eyes wide open and saying "I will use my credit card to buy a Mercedes"! HA! Most South Park material is crude, but I found this especially funny!!!
Frese, the key phrase there is "most purchases." You just take a bunch of cash into the grocery store with you or to home depot or to the mall or to buy a car (j/k) or whatever like people used to do in ancient times.
Yeah, credit card companies are quite predatory and the balance transfer option tempts most people at a really weak spot: self-discipline.
Dave Ramsey would be proud, Anthony.
predatory. c'mon, Anthony...you're using that word? I don't discount the idea that using cash to pay for things is a better idea...but that doesn't need to devolve into that.
Who is Dave Ramsey?
Check him out at daveramsey.com. He's well-known radio personality and author, and he is probably best known for his 13-week course, Financial Peace University. It's all about budgeting, getting out of debt, saving for the future, things like that. He's great. And he's all about using the cash.
Actually, here--I wrote a review on his course a while ago. You can find it here.