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Credit Cards Lose Popularity: People Turn To Cash
More people start to prefer using cash, therefore, the use of credit cards begins to decline. Fewer consumers are willing to borrow the funds for purchases using plastic as it can lead to debt. Of course, particular financial services may help to consolidate credit card debt, but many consumers consider that it is still better to avoid such effects. Besides, cards became less attractive for people due to the higher fees and interest rates.
TransUnion Reports Credit Card Use Decline
TransUnion, one of the major credit rating bureaus, has noted the decline in the usage of credit cards for general purpose. The credit bureau has recently reported that the held study showed almost 8 million people refusing the usage of general purpose credit cards.
In fact, according to TransUnion the number of people who don’t use or just don’t have credit cards comprises now over 78 million. Moreover, the bureau noted that the credit card delinquencies had also declined by 9.8% during the third quarter of 2010 compiling the information used in defining the personal credit score. The performed facts show that mostly people are not willing to face debt problems and look for the suitable ways of how to get out of debt.
Federal Reserve Proves Data
Despite the decline of credit card usage TransUnion noted that consumers still use credit in other forms. Following the reports of Wall Street Journal, the Federal Reserve observed that the use of credit cards was falling in February, 2011, though, the use of non-revolving credit was still rising. Actually, the only increase of revolving credit use was noticed once since 2008 and during February of 2011 the bank-extended lines of credit and credit cards declined by $2.71 billion. However, the non-mortgage consumer loans or non-revolving credit rose by over $10 billion during February. Hence, the data performed by the Federal
Reserve proves that the assessment of TransUnion is plausible.
In fact, banks have stricter rules concerning the interest rate charging due to the CARD Act (Credit Card Accountability, Responsibility and Disclosure Act). Even though, the rates are not capped, it is forbidden for the financial institution issuing the card to raise the interest rates without a particular amount of notice. The number of membership fees is starting to increase slowly along with the average credit card interest rates charged by the banks.
