3 reasons for a drop in credit card use
The number of Americans who own at least one credit card is at an all-time low. According to a 2014 Gallup Poll, 29 percent of Americans say they do not own any credit cards. To compare, that number in 2008 was 22 percent. The recession isn’t the only factor is this trend, according to economics experts. Here are three reasons they give for the declining use of credit cards:
1. Rise in debit cards
For years, credit cards offered a fast and secure way to pay for goods. Today’s consumers can get the same convenience without interest rates and late fees. Of course, the money has to be immediately available, but consumers seem to be saying they only used credit cards for convenience and perhaps got caught in the trap of waiting to pay off cards, which can be expensive.
2. More responsible use
A number of indicators point to Americans being more responsible with their credit cards. Credit card debt has fallen by billions of dollars. Last year, delinquencies dropped to an 18-year low. The average American’s credit card debt is more than $500 less than it was in 2006. Credit card debt is lower, and more people pay it off each month than in years past. After the recession, Americans focused on paying down credit card debt and saving money.
3. Changing eligibility policies
While the recession changed consumer spending habits, it also forced banks and businesses to adopt stricter rules for issuing credit. The days of issuing credit cards to every college freshman are over.
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