RateAPY

Credit Card Balances Decrease Dramatically

Posted by: RateAPY Bank Rates News
January 11th, 2010

Between 2004 and Q3 of 2008, American revolving credit card debt increased steadily. Only a couple of years ago, Americans were known as having a debt-friendly culture. Beginning in Q4 of 2008, the trend reversed. Debt is no longer in vogue, and saving money has replaced the previous mindset.

In the month of November 2009, revolving credit card balances decreased by 18.5%. This is much more than economists expected–they were expecting a reduction of about $5 billion. The 18.5% represents $13.7 billion, or nearly three times expectations.

With Americans de-leveraging at a neck breaking pace, it is interesting to speculate about the future of credit card debt, especially as it relates to America’s savings patterns. Americans are using their credit cards less and in some cases, saving more. Banks might see an increased demand for savings accounts, money market accounts, and certificates of deposit.