Can you believe that there are 8 million people who have said no to credit cards and put them away for good? The number of people who do not own a credit card has risen to 78 million from just 70 million about a year ago. In just a span of one year, over eight million people have shredded their credit cards, and are making a conscious effort to reduce and eliminate their debts. Some of them have also given up their credit card, wary of the ever increasing fees associated with them.
In the third quarter of the current financial year, credit card debt in the United States dropped by 11%, compared to the same time last year. Many financial analysts are calling this an “unprecedented” move, since people always seek out more credit cards as compared to shunning them. This can be termed as a side effect of the economic downturn that shook up the mindset of people. Consumers are now focused on building a nest egg for tough financial times as compared to taking risks with credit cards.
However, TransUnion, one of the three credit bureaus, said that the increase in the number of people without credit cards cannot be completely attributed to high fees and public outrage. With the CARD Act coming into play, credit card lenders lost their freedom in hiking the fees and interest rates as and when they deemed fit. Hence, the banks wrote off a number of accounts that they thought were not worth holding on to. While the consumers are staying away from risk by saving up for tomorrow, banks are also playing their part by eliminating high-risk cardholders.
With the banks tightening their rules governing credit cards, newer players are entering the market in order to launch newer products. The prepaid credit card by the Kardashian sisters is just one such example. The Prepaid card launched by these three sisters has already irked up innumerable consumers because of the exorbitant and ridiculous fees associated with them. These “predatory” credit cards are on the verge of being removed from the market after Richard Blumenthal, an Attorney General from Connecticut, raised concerns about the pernicious fees on these prepaid credit cards.
For individuals who thought that the credit card free revolution has begun, here is some news. The credit card market is all set to double over the next 24 months. This is the calm before the storm.