One of the ways you can get back on financial track and pay your mortgage each month is to cancel your credit cards and live on cash. If you can’t afford to buy it, putting it on your credit card is only going to get you deeper in debt. And according to a recent study by TransUnion, one of the major credit reporting agencies, it looks like about 8 million consumers are taking that advice.
According to the study, millions of Americans have stopped using their general-purpose credit cards in the last year. The credit reporting agency says that one of the main reasons for this is due to consumers trying to increase their credit score so they can apply and qualify for some of today’s low mortgage rates, but other factors include charge-offs by banks for high-risk account holders and less spending overall for American consumers. The study also showed that people who had higher than average incomes were just as likely to stop using their credit cards over the past year as those with lower than average incomes.
In 2009, there were about 70 million consumers who did not have a valid general purpose credit card issued to them by a bank. In the last year, about 8 million more consumers joined that group. As a result, the group without bank-issued general purpose credit cards is one of the fastest growing groups in the consumer industry.
On the down side of this study, the balances on outstanding credit card balances continue to rise. Just because millions of consumers have stopped using their bank-issued credit cards does not mean that those balances are dropping. These consumers are not necessarily paying off their credit cards which means that interest is accruing. But consumers overall are becoming smarter with their money by paying down their balances, making payments on time and making sure they do not incur more debt by borrowing from other credit sources.
Here are some other numbers that TransUnion has reported regarding credit card debt during the first three quarters of 2010:
* Alaska had the highest average credit card debt when compared to other states. Alaska’s average credit card debt was more than $7,150. Hawaii came in second at $5,716. Iowa and North Dakota were the two states with the lowest average credit card debt at $3,807 and $4,103 respectively.
* 35 states showed an increase in average credit card debt when compared to the previous quarter. The largest increases in average credit card debt occurred in West Virginia at 2.81 percent, Wyoming at 2.2 percent and Hawaii at 2.19 percent.
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