Following a year of interest rate hikes and otherwise deteriorating credit card terms, middleclass Americans may be losing their fascination with plastic. According to a new survey, almost one third of Americans with annual incomes over $50K say that they have cut back on credit card usage compared to one year ago.
The survey was performed in December by the market research firm Sentient Decision Science. Despite the extended economic recession and record unemployment rates, which have forced many consumers to turn to their credit cards to help make ends meet, 32 percent of respondents said that they are using their credit cards less than they were a year ago. In spite of the challenging economic environment, only 11 percent of the people surveyed said that they use their credit cards more.
The survey also found that Americans are trying to reduce their credit card debt in various ways, either by charging less, paying off more of their balance each month or paying off the balance in its entirety every billing cycle.
The results of the survey are substantiated by recently released numbers from the Federal Reserve, which reported that revolving consumer credit, a measure of credit card spending and outstanding credit card balances, dropped by 18.5 percent or $13.7 billion in November, almost three times as much as economists had predicted.
The reports of lower credit card usage could indicate that consumers are getting weary of plastic, following a year of progressively worsening credit card terms. 61 percent of the consumers surveyed said that the terms of their credit cards had deteriorated. Four out of ten had had their interest rate raised, 20 percent had seen increased late fees, and 17 percent had had their credit limit decreased.
40 percent of respondents said that they were worse off financially than one year ago, continuing the trend from a year earlier, when, at the height of the credit crisis and amidst dramatic stock market losses, about half of respondents (48 percent), said they were worse off financially.
The study was commissioned by First Command Financial Services and was based on a survey of 1,000 U.S. consumers aged 25 to 70 with annual household incomes of at least $50,000.
