Credit Card Users Plan to Charge Less in 2009
According to a study by GfK Roper Public Affairs & Media, 32 percent of 1004 people polled responded that they would be using their credit cards less. On the other hand, 50 percent said that they would not change their usage habits. 15 percent said that they would not use their credit cards at all. The remaining 1 percent revealed that they would be using their cards more. The independent poll was conducted December 5 through December 7 of 2008. The following other facts were uncovered during the survey:
1) 72 percent of those polled disagree with the fact that credit card companie should have the right to raise rates and/or change terms for any reason.
2) 71 percent polled believe that credit card companies should be further regulated by the Federal Reserve.
3) 67 percent of individuals do not agree that bail out funds should be used to help people who can not pay off their credit cards.
4) 40 percent of poll participants credit card users find that paying by credit card is far more convenient than paying by cash
5) 19 percent of participants use their credit cards for emergency expenses.
50 percent responded that they would continue to use their credit cards as before. The United States is a credit based society as opposed to other emerging economies like Russia who use cash. The creation of modern credit systems has fueled economic growth in our country for many years. The lack of credit available in this current economic environment has caused significant problems for certain industries. The automakers have suffered deeply due to the current credit crisis. Consumers without funding can not make large purchases like cars. Suffering carmakers like General Motors and Chrysler are finding it very difficult to survive in this environment. The same principles apply to retailers as credit card limits are slashed. Ultimately, it will consumer spending that will get us out of this financial mess.
Those 15 percent who do not plan to use their credit cards reflect a portion of consumers who are suffering from financial problems. These people have perhaps suffered some sort of job loss, loss of savings or plan to save money. Unfortunately, this does not help our economy. It will be up to our next Presidential Administration to create jobs and instill a renewed confidence in the American buyer.
The other portion of the poll suggests that consumers are not happy with the way credit card issuers conduct their business. This should not come as a surprise since over 60,000 people left comments on the Federal Reserve website complaining. Credit card customers are complaining about hair-trigger interest rate hikes. Some customers have seen rates double and even triple. Others have seen their credit limits reduced substantially as well. Credit card issuers will comment on any specific cases, but maintain that this additional revenue is needed to make up for mounting delinquencies.
In all, I believe that most Americans will resume their old spending patterns once the economy recovers. Card issuers will also see defaults decrease once Americans are working again. Current unemployment is at an all time high of almost 7%. An estimated 24,500,000 Americans are without work. This is also a negative factor affecting the credit markets. Regulation of the credit card industry is not by favored by industry insiders at this point. However, more stringent regulations on the credit card industry could prevent what has happened to our fledgling mortgage markets.
According to a study by GfK Roper Public Affairs & Media, 32 percent of 1004 people polled responded that they would be using their credit cards less. On the other hand, 50 percent said that they would not change their usage habits. 15 percent said that they would not use their credit cards at all. The remaining 1 percent revealed that they would be using their cards more. The independent poll was conducted December 5 through December 7 of 2008. The following other facts were uncovered during the survey:
1) 72 percent of those polled disagree with the fact that credit card companie should have the right to raise rates and/or change terms for any reason.
2) 71 percent polled believe that credit card companies should be further regulated by the Federal Reserve.
3) 67 percent of individuals do not agree that bail out funds should be used to help people who can not pay off their credit cards.
4) 40 percent of poll participants credit card users find that paying by credit card is far more convenient than paying by cash
5) 19 percent of participants use their credit cards for emergency expenses.
50 percent responded that they would continue to use their credit cards as before. The United States is a credit based society as opposed to other emerging economies like Russia who use cash. The creation of modern credit systems has fueled economic growth in our country for many years. The lack of credit available in this current economic environment has caused significant problems for certain industries. The automakers have suffered deeply due to the current credit crisis. Consumers without funding can not make large purchases like cars. Suffering carmakers like General Motors and Chrysler are finding it very difficult to survive in this environment. The same principles apply to retailers as credit card limits are slashed. Ultimately, it will consumer spending that will get us out of this financial mess.
Those 15 percent who do not plan to use their credit cards reflect a portion of consumers who are suffering from financial problems. These people have perhaps suffered some sort of job loss, loss of savings or plan to save money. Unfortunately, this does not help our economy. It will be up to our next Presidential Administration to create jobs and instill a renewed confidence in the American buyer.
The other portion of the poll suggests that consumers are not happy with the way credit card issuers conduct their business. This should not come as a surprise since over 60,000 people left comments on the Federal Reserve website complaining. Credit card customers are complaining about hair-trigger interest rate hikes. Some customers have seen rates double and even triple. Others have seen their credit limits reduced substantially as well. Credit card issuers will comment on any specific cases, but maintain that this additional revenue is needed to make up for mounting delinquencies.
In all, I believe that most Americans will resume their old spending patterns once the economy recovers. Card issuers will also see defaults decrease once Americans are working again. Current unemployment is at an all time high of almost 7%. An estimated 24,500,000 Americans are without work. This is also a negative factor affecting the credit markets. Regulation of the credit card industry is not by favored by industry insiders at this point. However, more stringent regulations on the credit card industry could prevent what has happened to our fledgling mortgage markets.
Labels: credit card, credit card regulation, credit cards
Credit Card / Financial news blog post by Todd Holliday at 7:40 PM 