America's Great $167 Billion Credit Card Pay Off Slows as Consumer Confidence Returns
06/16/2011

Statistics released this month by the Federal Reserve reveal the decline in America's collective credit card debt is grinding to a halt after being slashed by $167 billion since 2008.

Online PR News – 16-June-2011 – – America's Great $167 billion Credit Card Pay Off Slows Consumer Confidence Returns

Statistics released this month by the Federal Reserve reveal the decline in America's collective credit card debt is grinding to a halt after being slashed by $167 billion since 2008.

we are now seeing the monthly revolving credit balance for the USA becoming stable as new applications are on the rise as consumers rebuild credit scores

The statistics released by the FRB on 7 June 2011 reveal that America's national consumer credit card and revolving credit balance has:
* Fallen from an all time peak of $957.5 billion in 2008 to $790.1 in April 2011 - a reduction of over $167 billion
* Average fall of $6.2 billion per month since 2008
* Average fall for March/April 2011 combined was only $0.6 billion - a 90% reduction on the average decline seen since 2008.

Richard Greenwood of credit card comparison website SecuredCreditCards4U.com explains the factors behind the statistics. "During the GFC consumer debt such as credit cards went from being the average Americans best friend to worst enemy. Millions of Americans have ended up with bad credit scores and had to battle with increasingly strict lending criteria from the banks which has led to a reduction in new debt and a decline in existing debt as consumers seek to pay the debts off." Mr. Greenwood added that "we are now seeing the monthly revolving credit balance for the USA becoming stable as new applications are on the rise as consumers rebuild credit scores".

Research conducted by the Boston Fed bank during the GFC revealed an increase in the uptake of prepaid credit cards which carry no requirement for a credit check or risk credit scores being damaged. The post GFC period is also seeing a surge in the number of applications for secured credit cards. Secured credit cards are secured against a deposit the account holder places with the bank which avoids the risks of getting too far into debt is very helpful to rebuild credit and access products requiring a higher credit score. Google Insights data reveals search volumes for 'secured credit cards' more than doubled between 2007 and 2010.

Mr. Greenwood predicts America's collective debt will start to grow slowly over the next 12 months and consumer confidence builds and those rebuilding credit after being hit by the GFC start to see the benefits of rebuilding credit in the form of good credit scores.

References:
http://www.federalreserve.gov/releases/g19/current/g19.htm - Federal Reserve Consumer Balance - released June 7, 2011
http://www.bostonfed.org/economic/cprc/ - Survey of Consumer Payment Choice 2009
http://www.google.com/insights/search/#q=secured%20credit%20cards&geo=US&cmpt=q - Google Insights