Credit Cards Users’ Spending Habits are quickly changing in this economy

By: Michael Griffin

With the economy still in a deep recession, consumers are changing their buying habits. Not only are people spending less, they are evaluating their purchases a little more thoroughly and only buying necessities. Just a few years ago, the percentage of credit card users was continually growing, however, due to an increase in fees and the economy, the percentage of users has experienced a drastic drop off. While the percentage of credit card users decline, prepaid debit cards companies are becoming fiercely competitive as an alternate option to spend money and manage finances.

According to the Federal Reserve, “consumer credit card spending suffered its biggest decline in more than 30 years in February 2009.” Their report further concluded that, “revolving credit declined by 9.17 percent which is the biggest drop since January 1978.”At a time in the economy when consumers are tightening their belts and being laid off, purchasing items on credit has lost a lot of its appeal. Dennis Moroney, a research director from TowerGroup, confirms that consumers’ spending habits have drastically changed stating that “people are fearful” and “you don’t see them in the shopping center buying big screen TVs.” Instead, they are likely to be saving money and paying off any loans accruing interest in order to stay financially strong in this recession.

Peoples’ spending habits aren’t the only thing changing either. Credit card companies are lowering their limits and enforcing stricter rules. In anticipation of the CARD credit card reform act and according to an article recently published by the Consumerist, some credit card companies have begun to reduce grace periods, cut credit lines, increase fees on balance transfers to 5%, and increase minimum payments and APR. These are big changes a lot of credit card users may not even be aware of yet, and after they are, they may consider changing their means of spending on an even greater scale.

Of course, as credit cards users are declining, people are choosing a better way to spend and manage their finances with prepaid debit cards. Due to massive loans and credit card debt, many people have ruined their credit – prepaid cards offer them another option, as no credit checks or bank accounts are necessary in order to obtain one. Prepaid cards also give users the added benefits of being able to make purchases worldwide and online, allow them to be in control of their money with no fees and no debt, and allow them added security as carrying prepaid cards are much safer than carrying cash.

It’s plain to see that in this economy people are focusing on how to better manage their finances as consumers lose their jobs, deplete their unemployment, and use up their savings. The overwhelming amount of debt accrued by many credit card users wasn’t an issue until people realized they may not be able to make their payments after unexpected losses in their personal income. Stay out of debt and start managing your finances better with prepaid debit cards.

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