The recent unemployment data had some piggy bank information with it. Americans are using fewer charge cards, and less use is being made of the cards they do use. There isn’t really as much credit available, and charge cards aren’t seen as the best source for instant money they once were. The data also shows that individuals are saving more and more. Consumer goods are a huge part of the economy, and purchasing non-essential goods has dropped off which is counterproductive to the economy.
Credit card use falls
According the Wall Street Journal, fewer individuals are using their charge cards for consumer purchases. For a while now, individuals have been using revolving credit (charge cards, credit lines at banks) less although non-revolving credit (like payday cash advances, mortgages, money advances, and student loans) is also diminished. In fact, the use of revolving credit has dropped each month for the past 21 months consecutively. Credit card companies may need a payday advance themselves before long.
Unemployment has a lot to do with it
Individuals can’t spend cash on non-essential goods during recessions. Cash on hand becomes more important. If a person makes a big purchase like a new refrigerator or living room set on a credit card, making minimum payments for the next 50 years is not as palatable. The national savings rate, on the other hand, went up. It is presently at 6.4 percent, as outlined by the Commerce Department, up from 6 percent in April.
Less security equals less frivolity
There is no point in getting unnecessary goods, particularly if you have no idea if you’ll be able to afford the payments a couple of months down the road. If financial security is the goal you’ve in mind, there is no have to go further into debt that you don’t need, unless you are getting a loan to consolidate and get some debt relief.
Further reading
Wall Street Journal
http://online.wsj.com/article/BT-CO-20100806-715007.html
