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8 Million People Abandon Credit Cards

From CNN Money.

"In the past year, more than eight million consumers have stopped using credit cards, according to TransUnion, a Chicago-based credit researcher. That means 78 million U.S. consumers do not have credit cards, compared to 70 million last year."

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"...the decline is partly due to "charge-offs in the higher risk segments" and partly because of "more conservative spending in the low-risk segments."

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"When people are confident about their financial situation and the economy, they feel more confident about using credit," she said. "When they're scared or nervous about their own economic situation, or the economy in general, then they're more likely to buckle down and avoid debt altogether."

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"It's not just the consumers, said Ben Woolsey, director of marketing and consumer research for Creditcards.com, but also "the knee jerk reaction of the credit card industry to the recession and the credit card act."

He was referring to the Credit Card Accountability, Responsibility and Disclosure Act, which went into effect earlier this year and put a serious cramp on the industry's ability to raise rates and impose fees. As a result, the industry cut off the consumers that it saw as dead weight."

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"These new obstacles to the credit card industry are seen as opportunities for other aspects of the economy, such as prepaid debit cards, which have their own host of problems."

Hey--as long as they read the fine print before signing up, I don't really care where they go!

Posted by Cute at 8:45 PM

Labels: financial (non-tax)