Meet Your New Credit Card Consumer
Our own consumer credit came out last week and wasn't too encouraging. Well actually it is encouraging because it means the consumer has finally gotten smart.
Wall Street Pit:
Yesterday, a $14.8 billion contraction in consumer credit was reported for the month of September. That translates into a contraction at an annual rate of 7.3% for the month, 6.1% in the third quarter, which follows a 6.6% contraction in the second quarter. Revolving credit decreased at an annual rate of 10 percent, and nonrevolving credit decreased at an annual rate of 3.8 percent.
It would seem that never ending growth has ended. Keep in mind that the consumer and their spending represents 70% or more of this nation’s economy.
In the UK, PwC is looking at the new credit card consumer, one who uses plastic for payments, not racking up debt.
But isn't using plastic to make payments pretty much the same thing? Eventually you've got to pay, be it a big screen or a cell phone bill.
The U.K. credit card market is set to undergo a massive change as banks sell off businesses and the government seeks to inject more competition in an attempt to entice consumers back to the market, according to a study released Monday.
The economic downturn has already cut credit card borrowing by 3% with the number of plastic cards down 8% over the last year, said PricewaterhouseCoopers. At the same time, bad debts in the sector have reached historic highs and now stand at nearly 6% of outstanding balances with every chance that these will reach 9% by the end of 2010, it added.
Meanwhile, the government has just launched a public consultation into credit and store card regulation primarily aimed at the way in which repayment policies lead to what are seen as excessively high interest rates. In addition, the way in which credit is sold across Europe is going to be tightened up to protect consumers through the Consumer Credit Directive, which is due to come into force by June next year.
"Large scale change within the sector over the next few years is inevitable. We're likely to see credit cards being reinvented as payment rather than borrowing tools," said Richard Thompson, partner at PricewaterhouseCoopers.
Good luck with that, kids, just a tad bit more now, keep going, you're almost there.