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More than 8 million drop out of credit card use

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  • More than 8 million drop out of credit card use

    November 29, 2010

    More than 8 million consumers stopped using credit cards over the past year. The decline stems from a combination of consumer choices and bank actions.

    An analysis by credit reporting agency TransUnion found that use of general purpose credit cards bearing MasterCard or Visa logos, or issued by Discover or American Express, fell more than 11 percent in the third quarter, compared with the July to September period last year.

    About 62 million people now have an active card, compared with 70 million a year ago.

    The Chicago company found that consumers in the subprime category, or those with low credit ratings, were believed to be without cards mostly because they were shut down by banks after payments fell behind or balances were written off.

    "One can quite reasonably infer that's not voluntary," said Ezra Becker, vice president of research and consulting in TransUnion's financial services business unit. Banks have written off record amounts of credit card balances in recent years.

    But a significant portion of the decrease in card usage reflects decisions by cardholders to stop using credit, Becker said. "They're simply either not purchasing as much or paying down balances."

    Many of these individuals may have shifted to using debit cards. In the past several years the use of debit cards has grown steadily and now surpasses credit card use in both the number of transactions and dollar volume. Interest rate increases by credit card companies and reduced credit lines have contributed to that trend.

    Still that doesn't mean consumers are shunning credit altogether. The average card balance stood at $4,964 in the quarter. That represented a slight increase from $4,951 at the end of the second quarter, and the first quarter-over-quarter increase in a more than a year.

    Yet it also reflects a 13 percent drop from $5,612 at the end of Sept. 2009.

    Becker said the balance increase from the second quarter is mostly an indication that consumers are still under stress. Prior to the recession, he said, carrying a credit card balance was more of a lifestyle decision reflecting spending choices. "Now it's out of necessity," he said. "In times of financial distress, nobody wants to carry a balance. Where people can afford to pay things down, they do."

    Unlike mortgages, credit card delinquencies are in a normal range. The rate of late payments continued to fall in the third quarter. Just 0.83 percent of payments were past due by 90 days or more, compared with 0.92 percent in the prior year period.

    Becker said late card payment rates have varied widely over time, but haven't skyrocketed to anywhere near what was seen in mortgage delinquencies during the recession.

    That's partly because with unemployment high, credit cards became more important for cash-strapped consumers who needed them to purchase necessities like groceries and gasoline, so they kept their payments current.

    The third-quarter delinquency rate was highest in Nevada, at 1.28 percent, and Florida, at 1.09 percent. These two states have also been among the hardest hit by the housing crash and foreclosure crisis. Late payments were lowest in North Dakota, at 0.48 percent and South Dakota, at 0.53 percent.

    http://www.breitbart.com/article.php...show_article=1
    Filed Chapter 7 July 2010
    Attended 341 September 2010
    Discharged November 2010 Closed November 2010

  • #2
    I hope after the way credit card companies mistreated so many people that they lose a huge amount of future customer base. I am now happy to use my debit card and cash/checks only now. I will not go back to using a credit card after this.

    The only possible exception would be an emergency one for the ONLY purpose of purchases where I fear the company could abuse my credit card (e.g. ordering something online from a company that could end up trying to drain my bank account illegally, or a parking lot automated gate that takes credit cards, etc.).

    Comment


    • #3
      Fortunately, I can now say I am one of the 8 million that have dropped out of credit card use. I will further add that I don't miss them one bit.
      Filed: 6/30/2010
      341: 7/26/2010
      Discharged: 10/6/2010

      Comment


      • #4
        well i was ONE...until i felt to "build" my credit back up i needed to get a few cards and begin using them again...

        we felt so sick this week we went on line today paid them off...(it was just a rather small amount, but it was to help us build credit) and said........FORGET THIS...we can't do it!!!!!

        the ONLY reason i wanted to build up our credit was to be able to buy this house in a few years...when now the owners are telling us...don't give it a thought we will hold the mortgage for you...so now the only worry is the OLD car!! LOL!!!

        time will be the ONLY healer here...not charging again!
        8/4/2008 MAKE SURE AND VISIT Tobee's Blogs! http://www.bkforum.com/blog.php?32727-tobee43 and all are welcome to bk forum's Florida State Questions and Answers on BK http://www.bkforum.com/group.php?groupid=9

        Comment


        • #5
          You don't need a credit card history to get a mortgage. How about showing up to the bank with a 20% or more down payment?

          Originally posted by tobee43 View Post
          well i was ONE...until i felt to "build" my credit back up i needed to get a few cards and begin using them again...

          we felt so sick this week we went on line today paid them off...(it was just a rather small amount, but it was to help us build credit) and said........FORGET THIS...we can't do it!!!!!

          the ONLY reason i wanted to build up our credit was to be able to buy this house in a few years...when now the owners are telling us...don't give it a thought we will hold the mortgage for you...so now the only worry is the OLD car!! LOL!!!

          time will be the ONLY healer here...not charging again!

          Comment


          • #6
            Originally posted by jacko View Post
            You don't need a credit card history to get a mortgage. How about showing up to the bank with a 20% or more down payment?
            I agree. These banks will have to give out credit in the future to "average" credit worthy people or else they will not be able to stay in business.

            Bring them 20 percent, and you can almost name your interest rate, I think.

            Will 20 percent do the trick?

            I already have a BK 13, and now, if I walk, its a foreclosure too.

            Decisions, decisions...

            Comment


            • #7
              Originally posted by jacko View Post
              You don't need a credit card history to get a mortgage. How about showing up to the bank with a 20% or more down payment?
              no....20% doesn't seem to cut it anymore.....?????? we even had someone offer with a 850 fico score to get the mortgage for us and have us refinance in a few years....they got denied at every bank and we mustarded up over 35%....(houses are still low in this area).

              we are hoping to either have the owner hold the mortgage and or....just paying cash if we are smart....TODAY is our "second" deposit into our new savings account....and i figure if i am really careful the owner gave us five years....we should have the money ourselves...i don't even want a darn mortgage again.
              8/4/2008 MAKE SURE AND VISIT Tobee's Blogs! http://www.bkforum.com/blog.php?32727-tobee43 and all are welcome to bk forum's Florida State Questions and Answers on BK http://www.bkforum.com/group.php?groupid=9

              Comment


              • #8
                I have to ask those on this board why even buy a house anytime in the near future. You can rent a house which gives you more flexibility to where you can live and you can move when necessary. I owned a house for 19 years and have finally let go of the concept of having to own a home.

                I did pay 20% down to get this home as well. I am thinking maybe 5 or 10 years from now, I may consider owning a home again, but only if I get my finances and job stability to a high level.

                Comment


                • #9
                  Originally posted by helpme2010 View Post
                  I have to ask those on this board why even buy a house anytime in the near future. You can rent a house which gives you more flexibility to where you can live and you can move when necessary.
                  I'm starting to feel the same way.
                  I've owned many homes, both for personal living and as a landlord. What I'm seeing the last few years makes me leery of buying again, at least for a long while. And it would be necessary to wait anyway, since my credit is in the crapper.

                  Comment


                  • #10
                    Originally posted by ryan View Post
                    I'm starting to feel the same way.
                    I've owned many homes, both for personal living and as a landlord. What I'm seeing the last few years makes me leery of buying again, at least for a long while. And it would be necessary to wait anyway, since my credit is in the crapper.
                    The only reason to stay in the home is if you are going to be in it until you die, and the payments are comparable to renting.

                    My prediction is that real estate is going to be "cheap" for at least the next 10 years, and prolly longer, as most people are going to be very hesitant to buy and banks are not going to lend.

                    Flipping mess this all is.

                    Comment


                    • #11
                      Originally posted by helpme2010 View Post
                      I have to ask those on this board why even buy a house anytime in the near future. You can rent a house which gives you more flexibility to where you can live and you can move when necessary. I owned a house for 19 years and have finally let go of the concept of having to own a home.

                      I did pay 20% down to get this home as well. I am thinking maybe 5 or 10 years from now, I may consider owning a home again, but only if I get my finances and job stability to a high level.
                      Absolutley agree. I am in a spot where my job prospects are not looking good in the city I am living in. And if it doesn't get better within the next two years, I am going back to school. And, this house will be dumped. Your idea about flexiblity is so true.

                      Home ownership is sort of like that girl you have been dating for a few months. At first, all is good. But, then she (the home) gets a bit testy and jerky, at which she begins to lose value. There is no longer any flexibilty with this girl...

                      and in that case it is better to end the relationship earlier than later...and start looking at your other options.

                      Comment


                      • #12
                        Originally posted by keepinitreal View Post
                        November 29, 2010
                        Unlike mortgages, credit card delinquencies are in a normal range. The rate of late payments continued to fall in the third quarter. Just 0.83 percent of payments were past due by 90 days or more, compared with 0.92 percent in the prior year period.
                        This is a funny statement when you look at what's behind it.

                        The only reason credit card defaults are in a normal range, is, they aren't allowed to extend and pretend like they can with mortgages.

                        The banks continue to be mostly insolvent, writing off each quarter only as much as their cash flow allows.
                        filed chapter 13..confirmed...converted to chapter 7...DISCHARGED!

                        Comment


                        • #13
                          I hope millions and millions of more people stop using credit cards so those companies will get a clear message drilled straight into their pocket books

                          Comment


                          • #14
                            Originally posted by helpme2010 View Post
                            I hope after the way credit card companies mistreated so many people that they lose a huge amount of future customer base. I am now happy to use my debit card and cash/checks only now. I will not go back to using a credit card after this.

                            The only possible exception would be an emergency one for the ONLY purpose of purchases where I fear the company could abuse my credit card (e.g. ordering something online from a company that could end up trying to drain my bank account illegally, or a parking lot automated gate that takes credit cards, etc.).

                            Bingo, I agree with you 10000000% When I spend my own money, I don't have to worry about debt collectors calling me. Credit Cards should only be used in cases of emergency, and even then it should be used sparingly.

                            Comment

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