Credit Card Debt Hits Low

It’s not totally surprising to me that credit card debt has hit an almost decade long low. It may seem totally counter intuitive to think that credit card debt would be very low in a time when people are cash strapped because of a variety of causes.

Things like joblessness, less overtime hours being available, and generally less hours being available even to make people full or part time, are really putting the squeeze on consumers.

However, either consumers are choosing not to put charges on their credit cards and get themselves further into debt – and revolving debt at that – or they simply aren’t able to put charges on credit cards because they can’t.

They “can’t” because a lot of credit card companies have put a lot more restrictions on both who they extend credit to, and how much credit they extend even to already existing customers. Lots of people have found that their credit limits have been reduced, their credit lines have been revoked completely, or they are having a difficult time even trying to secure new credit cards.

Because of this tightening of guidelines, this may play a part in the reduced credit card debt of all consumers here domestically here in the US. However, something tells me that it’s not just forced thriftiness. It’s also the fact that people are scared to get into debt. They are wising up to things like mortgages with sky high interest rates, credit cards that are just going to be impossible to pay off in the long run, and other debts that don’t bode well for their financial future.

People are saving money at record levels as well. This is due to the new awareness that you really do need to “save for a rainy day” so to speak. A lot of people got a nasty wake up call when the recession hit, they lost jobs or had hours cut that they relied on, and then they were totally strapped for money to pay their bills, and sometimes enough money to pay their mortgages and avoid a nasty foreclosure.

Now, people are wary, and they are really socking away their money. This is obviously a good thing in the long run, but right now, consumer’s reticence for spending is putting the economy in a deeper hole, which has a spiral effects on everything else. Hopefully some day we can come to a happy medium.