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Credit Card Applications » News » Other » Consumers Not Ready to Lift the Economy

Consumers Not Ready to Lift the Economy

November 12, 2009
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Consumer credit report received by the Federal Revenue shows that the people's total amount of debt has plunged in the month of June. The amount of credit outstanding fell by a record $21.6 billion in July, the sixth straight month of decline. A huge portion of the total debt comes from revolving credit which comes from credit card usage. The decline is considered to be the greatest since the Federal Reserve started receiving reports in the past. Other than that, the rate of decrease in overall consumer credit is approximately four times what the economists predicted.

Analysts say that the decline in credit is believed to have been caused by two things: consumers cutting back on their use of credit cards and the providers actually restricting the amount of credit they are offering to the public.

Many consumers keep their credit cards in their wallets which could either be because they are avoiding increasing their debts or they have no choice with the providers lowering their credit limit or both. The truth includes the increasing number of people choosing to pay off their credits and then stopping to create new ones. As a result, revolving credit in June fell by $6.1 billion from May's report.

With these figures, many economists are drawn to conclude that although recession is over, it will take some time for the country to develop. The road to economic growth implies the slow rebuilding of inventories which have been gashed in the previous year.

There are different programs that might just help rebuild the economy like Cash for Clunkers; however, they can only do so much as to provide a temporary boost in auto sales and financing. Retailers did not also quite succeed in the business during the back-to-school season. It is also predicted that the holiday season would not do any better to lift the economy.

One thing that greatly affects consumers' spending is employment. Improvements in the area of employment are predicted by many economists to come not earlier than 2010. America's unemployment rate grew to 9.7% in August. While last month, another 216,000 people lost their jobs.

With the steady increase in the number of unemployed people comes the stagnation of their spending. Scott Hoyt, senior consumer economist says that even if the country already seems to have recovered, it will take a while for the consumers to feel the changes in their lives. His claim is supported by Pierre Ellis, senior economist at Decision Economics saying that consumer spending would be growing in a relatively slow pace. Many predict that when consumers eventually get access to credit and the economy finally stabilizes, many credit card holders would opt to use their salaries over their credit cards.

Other issues that stress the public include health risks as many have been stripped off their housing and the global recession. Since mid-2007, the net worth has fallen by nearly 22%. This is not a very good picture for employment. When consumers are not buying, there is really no reason for businesses to start hiring people.

According to Ellis, "It looks like another jobless recovery".

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  • Larry
    With the Virgin / Barclaycard signature offer, there seems to be some consumer deception or maybe even outright fraud goin on.   I decided to jump on this offer..  read all the info on it..  was approved for their platinum card, paid the fee, then was only awarded 10,000 points instead of the advertised 20,000.   When i inquired about the less than advertised bonus points, Barclaycard claims only Signiture Visa cardmembers get the 20,000..  as a platinum cardholder, you don't qualify for that level of bonus, so you get 10k instead.   Well, in their current ongoing promotions, it states plain as day that....    Applicants approved for the Visa Signature or Platinum Card with $49 annual fee will receive 20,000 Bonus Points awarded to your Virgin America Rewards Account at the close of the first billing statement in which you make your first purchase or balance transfer (that is not returned or rescinded) and have paid the Annual Fee on the account (and such fee is not rescinded). They don't mention anything about a separate program for platinum cardholders..  However, trying to get someone to resolve this issue with either Virgin or Barclaycard seems to be rather impossible.. Seems to me they're simply drawing people in with the fraudulent offer, then simply saying, oh, we're sorry you don't qualify..  but thanks for signing up for our garbage credit card with insane fees..   
  • CreditLandCom
    Thank you for sharing your experience with us. We have reviewed this offer and you are correct, nowhere it is mentioned that 20,000 Bonus can become a 10,000 Bonus all of a sudden... We will mention this in our review of this card so others can make an informed decision. Another way to get Virgin miles is to get an American Express charge card: The Business Gold Rewards Card® now offers 50,000 Miles, though you do have to spend $5,000 in the first three months of card membership to get it. It also has $0 introductory annual fee for the first year, then $175. http://www.credit-land.com/details/the-business-gold-rewards-card-from-american-express-open.php Premier Rewards Gold Card now offers 25,000 Miles, though you do have to spend $2,000 during your first three months of Card membership. It also has annual fee of $0 for the first year, then $175. http://www.credit-land.com/details/american-express-premier-rewards-gold-card.php While we do not know If any of these offers make sense to you, we are at least sure that you will get advertised bonus in full if you decide to get them... Conversion rates for Virgin America are: 100 Elevate Points = 200 Membership Rewards® Points All the best.
  • Deborah Ellsworth
     would very much like to start a new credit history  by making payments on time I would tohave a credit card that is NOT PREPAYID! I don't need a card with a high limit just something to start a new credit history. Thank You Deborah Ellsworth
  • Deborah Ellsworth
    I would very much like to start a new credit line to get back on track. I DO NOT WANT A PREPAID CARD!! This new credit card if I am approved does not have to hace a high limit just something for me to start over again and prove myself ThankYou. D Ellsworth
  • Miss Edna
    there is a huge problem with the RFIP chip: it is easily compromised. There are already 'readers' in the form of what looks like a cellphone in a case, that scans all the info in the chip by merely walking near a person -- this 'reader' penetrates leather, cloth, spandex, etc. The only thing it will NOT penetrate is METAL. Perhaps one has seen commercials touting metal credit card cases. Here is my hint for a free fix: cut a piece of aluminum foil or use the foil that is used to keep foods fresh, like coffee. Cut it so that when folded once, it forms a sleeve for your credit card. place the credit card in the sleeve, then place the sleeve in your wallet.
  • Robin Parks
    I am looking to apply for the AARP Visa signature card from Chase that offers $100 after spend $500 in first 3 months, no annual fee and 0% interest first year; I don't want to mail in offer because of having to write in Social security #. Can you direct me to the proper on-line site?
  • CreditLandCom
    The Chase bank cards are not currently available at Credit-Land.com, but you can consider applying for the Citi® Dividend Platinum Select® Visa® Card - $100 Cash Back. The cards has similar terms and cash back program.
  • Becky
    This is Becky Now what do I do just waqit for acard to come to me?
  • CreditLandCom
    Once you have applied, you should receive a letter within 10 business days letting you know if you were approved and when your card will arrive. If you did not receive any letter or notification from the issuer, you should contact them directly. Also, you should contact the issuer if you’ve been waiting for your credit card longer than 30 days. Since we are not a bank and don’t issue credit cards, we cannot give you any information about your application or credit card.
  • SavingStar
    Thank you for posting about SavingStar. Just to clarify one sentence in your article, we have over 5 million members (not 500). Thanks, Josh
  • CreditLandCom
    Sorry for the misprint. We’ve corrected the sentence. Thank you for noticing that.
  • Eric
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