8 Milllion Less Americans Using Credit Cards

[jeffrey]

This may seem somewhat surprising. As technology improves and cash becomes seemingly obsolete, you might expect credit cards to gain in popularity as a matter of convenience. But less credit card use doesn't necessarily imply that more Americans are turning to cash, though it could. It just means that they aren't using credit cards, in particular. According to Ezra Becker, vice president of research and consulting in TransUnion's financial services business unit...

The Credit Card Market Evolves, Shedding 8 Million Customers - Daniel Indiviglio - Business - The Atlantic

[bjl584]

I wonder how many of those 8 million people who aren't using credit anymore aren't using credit simply because they can't?

A friend of mine had his credit trashed after a messy divorce, late payments on a mortgage, etc., etc. Anyway, his credit score is now so bad that he doesn't qualify for credit. He is forced to use cash for all of his purchases.

[disneysteve]

If you read the full article, you see some reasons.

The first is that credit card companies have tightened their underwriting standards.

You now need more than a pulse to get a credit card, the way it should have been all along. So now, lots of people who shouldn't have a CC don't and can't get one.

the regulation also caused credit card companies to broadly increase their interest rates.

Even people who were willing to carry a balance at 6 or 10 or 12% aren't willing to do so at 29.99%.

the average credit card balance has actually risen slightly in the last quarter

So the numbers aren't all that they first appear.

One other factor in people using cards less is that many people saw their credit lines lowered or closed entirely during the credit crunch. People who used to use cards and still would if they had one can no longer do so.

[maynard]

Good for the 8million people. Ive read about many people on here who use their cc for all purchases and pay them in full everymonth.. just to get the cash back and whatnot. Which is good because most people on here are financially responsible. But i dont beleive the vast majority of there general public is responsible enough to do that month after month.

I personally loathe credit cards and the credit card companies. My credit score was over 740 last i checked and i havent used a credit card in over 4 years. And i will never use one again. 100% garentee

[cjscully]

I view the number as a good thing and a step in the right direction. My grandparent's motto about credit was always if you can't pay for it in cash you can't afford it. It served them very well. They died with plenty of money in the bank.

No matter what the reason, the more people who kick their credit card habits the better.

[disneysteve]

My grandparent's motto about credit was always if you can't pay for it in cash you can't afford it.

Just because someone uses a credit card does not mean they can't afford to pay cash. We NEVER buy anything with our credit card that we don't have the money for already. We pay our bill in full every single month. We use a credit card for the convenience, the tracking and budgeting, the safety and the rewards.

I get annoyed when people equate using a credit card with being in debt or overspending. They are not necessarily the same thing.

[kork13]

I think a big factor there is probably people who have (either willfully or unwillingly) closed their credit card accounts. Really, the fact that fewer people are using credit cards isn't surprising to me in the least. The new regulations have opened people's eyes to some of the crazy stuff credit card companies were doing. Even if someone is totally unaffected by the changes, they became aware of what companies COULD still do, and what they are NOW trying to do in order to regain their income stream. Thus, people are getting scared away from credit cards, whether they are deep in debt, or never use them. People are closing cards that charge too much, or that they just don't use (this would also explain higher average debt levels--fewer people have a bunch of cards with no balances).

[cjscully]

Just because someone uses a credit card does not mean they can't afford to pay cash. We NEVER buy anything with our credit card that we don't have the money for already. We pay our bill in full every single month. We use a credit card for the convenience, the tracking and budgeting, the safety and the rewards.

I get annoyed when people equate using a credit card with being in debt or overspending. They are not necessarily the same thing.

Nope they're not the same thing, but I think that the people on this forum who are paying their entire credit card bills every month are the exception rather than the rule when compared to the rest of America and the world. The fact is that there are a lot of people who view credit cards as extra spending money. This post gives a pretty good idea of that thought process The Get Rich Slowly Forums • View topic - Inside the mind of a Spender Deep in Debt. I realize that this may not be how you think, but you can't deny that a segment of the population thinks exactly the way this guy does/did.

By the way, your post indicates that you're doing exactly what my grandparents said. You're not buying things you can't pay cash for so I'm not sure why you'd take issue with the statement.

[SimplySaving]

I hope that number keeps getting bigger and bigger. I would love to see the credit card companies go under for good.
DisneySteve - I think it is good if you do that. My husband and I used to do just as you do. We had credit cards but we felt pretty good about ourselves because we paid it off every month. Well, we got dave ramseyafied and finally cut up the credit cards and went to the debit cards. We noticed we actually spent less because we couldn't just say "oh, we don't have the money right now, but we'll have enough money next month, put it on the card." We would often have to take out of savings to pay of that credit card every month. Now we've actually gone farther than that and started using envelopes for several budget categories instead of the debit card - this has been the best thing we ever did! We are staying in budget for the first time in our lives. I do like the tracking abilities of the debit card but we keep our receipts and track everything manually. We have saved hundreds of dollars this way in two months and really got control of our spending in ways I didn't think was possible.
Also - I just don't like supporting those credit card companies. They've done horrible things to good people and only care about themselves. They can throw random fees at you even when you pay off your balance every month. "Cash is king" in my world.

[disneysteve]

finally cut up the credit cards and went to the debit cards. We noticed we actually spent less because we couldn't just say "oh, we don't have the money right now, but we'll have enough money next month, put it on the card."

If that is the mindset you have, then I would definitely agree that using credit cards is not for you. My wife and I never use our cards to buy things that we don't already have the money for. For us, it is just a convenience.

[snafu]

maynard/ss: Knowing that credit scores are being used for so many standards it may be short sighted to only use cash. Not wishing to challenge your views but point out that employers check credit scores before deciding promotions. Using credit once or twice a year keeps your FICO current. Should your circumstances change and you find a reason for credit, or another job, you may fail to qualify merely because you have fallen below the radar in today's economy.

[krantcents]

This number bothers me, because there is 8 million people who have difficulty using credit. This economy is very fragile! It is indicative of so many things such as financial irresponsibility, unemployment and too much debt. Everyone needs to understand and use credit responsibly. Maybe the 8 million people may benefit from reading my financial blog KrantCents — Making Sense of Money.