24/7WallStreet: Americans Give Up The Credit Card For The Holidays

[marmar]

Americans Give Up The Credit Card For The Holidays
Posted: November 30, 2009 at 5:35 am



Just over one-quarter of shoppers who made purchases over the Thanksgiving weekend used credit cards. Thirty-nine percent used cash and the balance of the shoppers used debit cards which are a cash-equivalent, according to survey conducted for Reuters by America’s Research Group.

The news is bad for retailers.

Consumers are not willing to go into debt to buy gifts this year. They are limiting themselves to the money they have stored in their mattresses. Among the unemployed and underemployed that cash is in very short supply. Among the middle class the supply is not likely to be much better.

The habit of going into hock during the holidays to spread cheer to loved ones and co-workers is a time-honored tradition in America. Consumers end up working the first half of the year after the Christmas season paying down large credit card balances. In 2009, credit Americans have come to loath credit because they believe that it is a road to economic ruin in a period in which they cannot borrow against the value of their homes and in which their credit card companies are encouraging them to reduce their balances.

The American consumer economy has not been a cash economy for years. There are over 600 million credit cards in circulation in the US according to the Nilson Report. The trend today is that the balances on those cards is going down. Americans want savings to be tucked away in the event that they lose their jobs. High debt is viewed by many as irresponsible. That was hardly the case two years ago.

American are telling retailers that they will not spend beyond what they have in their wallets. That will hardly make the holidays bright for stores that already face fewer sales than they had last year.

- Douglas A. McIntyre


http://247wallst.com/2009/11/30/americans-give-up-the-credit-card-for-the-holidays/

[dkf]

1. I hope they tracked their debit card balances to the penny.

Overdraft charges are crazy.

I was listening to a program where the former exec of a large bank said they would rearrange payments to get extra overdraft charges.

Even if you bought your starbucks coffee first, then you bought your lunch at noon, and then your mortgage hit putting you into overdraft late in the day, the bank would reorder the transactions so that your mortgage hits first, then they can charge you for 3 overdraft transactions instead of 1.

What a rip off.

[marmar]

2. I know Skank of America purposely let some of the checks I wrote linger in the ether.....

...... hoping and praying that I'd take too much out of the ATM.

[Jackpine Radical]

3. Ya know what would happen if I overdrew my debit card?

Same thing as would happen if I wrote a bad check. The credit union would pull money out of another account to cover it.

That's just one more reason why I stay away from banks.

[dkf]

5. If you have money there.

I don't think most of these overdrafters have other accounts to draw out of.

[Neecy]

4. Consumers are smarter than they think we are

With issuing banks raising interest rates on credit cards to 29%, even for those with spotless payment records, I doubt that anyone will be rushing to charge those suckers up.

[dkf]

6. If they want to screw the banks, forget using debit cards too. Write a check!

Banks still make the transaction fees on debit cards.