Borrowing on the Decline, Consumers Turning Away from Credit Cards?
According to a recent report, consumer borrowing fell in August for the first time in more than ten years. While this decrease was predominantly driven by changes in non-revolving debt, stores such as Kohl’s (KSS), Target (TGT), and Lowe’s (LOW) are reporting that shoppers are increasingly turning away from credit cards and opting for debit cards or cash. Not surprisingly, this decline in credit usage is hurting sales performance.
For their part, MasterCard (MA) and Visa (V) have both reported a significant increase in debit card usage. At the same time, analysts are cutting their expectations for both companies, as a decline in overall spending will reduce transaction fees generated every time someone swipes their card.
I can’t speak for anyone else, but our spending habits have remained relatively unchanged despite all the recent economic turmoil. Of course, we’ve always kept our spending more or less in check, so there’s not a lot to change. Aside from that, our credit limits haven’t been changed (and we never get anywhere near them)
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Awesome!
Comment by ragingpeasant — Oct 12th 2008 @ 7:26 amHopefully, recent events will help us all realize that credit, while a useful tool for some, can be dangerous.
Comment by NCN — Nov 3rd 2008 @ 7:23 pm