Declining usage of credit cards

Credit card usage is going down and according to experts the new credit card rules and saner purchasing decisions taken by consumers are behind this decline. People are tapped out according to experts who fee that the overall trend shows a decline in credit card usage. When the prices of houses were rising, a lot of house owners took advantage of the equity loans that came with quite low interest rates. These equity loans helped customers pay back the credit card debt where the interest rates were very high. The home values are on the decline now which means people don’t get the equity they used to, anymore.

According to many surveys, a lot of shoppers during this holiday season actually used cash instead of their credit cards as they had in the past. The reduced card usage according to industry experts is also because of the 13 billion dollars in credit card debt that consumers had built up over the last one year.

Credit cards weren’t entirely abandoned by credit cards in 2010. This was indicated from the fact that online sales actually went up by 13%. According to some experts the credit card reforms which were introduced to protect consumers from card issuers’ exploiting tactics, ended up cutting off debt for some of the customers. While on one side customers are realising about the pitfalls of using excessive credit, credit card issuers too are getting better with their tricks and also about issuing credit card accounts to customers.

According to experts both credit card customers and credit card issuers are at fault for credit abuse. There cannot be a card user without an issuer at the first place. Similarly, it is up to the personal responsibility of the card users when it comes to using cards, however, alluring or tempting the card issuers make it to be. Credit card customers need to have the right skills in order to manage their money. They fact that credit card usage is getting better augurs well given that consumers are spending a major part of the economy. Too much credit could again affect to the quality of the recovers. Borrowers and creditors are more cautious when it comes to leveraging the balance sheet compared to earlier. Over investment in real estate was partly responsible for the crisis in the past. Credit growing faster than income is an issue now and there would be an imbalance if that happens faster.