This is a guest post from our friends at BillShrink, the free, independent service that delivers personalized recommendations on credit cards. The company tracks card issuers’ rates and features to find users the best credit card. More money-saving tips and news from them include Visualizing America’s National Debt and Myths v Facts: Credit Card Usage and Debt.
Living within our means?
During this time of economic hardship, Americans have turned to behaviors shunned during times of prosperity. Brown bag lunches, bargain hunting, and homemade coffee have all become more familiar sights. Perhaps we’ve finally learning to live within our means?
A few weeks ago, we had even more evidence to confirm this newfound financial savvy. The Federal Reserve published a report showing personal credit card debt is on the decline. According to the report, Americans have paid off a whopping $101.2 billion in debt in the last 14 months. Our own figures here at BillShrink indicate this trend as well. Back in February 2009, 46% of our users noted that they paid off their credit card balance in full each month. Now a year later, nearly 59% of users report paying off their balance each month.
Many reporters have picked up on the good news of the decline of personal debt, including “The Early Show” on CBS. But a few days ago we received a very surprising phone call. The first quarter’s retail sales reports show a marked increase in consumer spending. How could consumers be spending more and yet have less credit card debt?
The answer: cash!
Turns out that last Christmas, a whopping 71% of shoppers planned on using cash or debit to purchase gifts, rather than credit. The National Retail Federation reported that cash usage was the highest level since 2005. We surmise that the trend is continuing as shoppers make purchases in the new year.
Do you think responsible enjoyment will be our new watchword in 2010? What about your own habits? Are you part of the 41% still busting out the plastic, or are you part of the 59% reaching for the green?