Branding executive John Gerzema says that the changes brought by the economic recession in terms of making cardholders more “cautious, frugal, and tactical” are part of a “massive cultural event for our society”.
Working for marketing and advertising firm Young and Rubicam and the co-author of a new book which explores the ways by which people change their spending habits, Gerzema says that the changes in consumer practice behaviors will be positive in the long run. On the other hand, he says that there are also realities that the credit card companies face which include the different credit-card debts incurred by their cardholders during the recession.
Gerzema says that rate of savings was insignificant at nearly zero percent with the economic downturn. The cardholders have incurred debts everywhere their households, credit card and mortgage obligations, etc. Their debts were at 40 percent higher than their incomes and the figure doubled from the same period of July to September last year.
Hartman Group vice president for strategy and innovation Jarrett Paschel said that Americans felt the need to spend more during the recession for their own compelling reasons despite the instability of their economic condition.
During the recession, increase in housing prices has made millions of Americans financially burdened which may have also compromised their spending for necessities.
Although a group of academic economists at the National Bureau of Economic Research said that recession already saw its end. The Conference Board consumer index shows that not even the slightest majority of Americans are feeling the recovery with confidence levels around 40 to 50 percent only.
The Conference Board shares that consumer index confidence levels reaching 90 percent means a healthy economy and the last time this figured showed was in December of 2007, the month of the recession’s onset.
With the impact of the global economic recession, Paschel pointed out that no one can be very optimistic or overconfident yet.
An economy finally taking flight would mean credit card companies also being able to recoup lost investments during the recession as well as individual consumers now paying off more responsibly on their credit card debts.
Paschel then concludes that for the credit card companies not to have a financial shortfall, the debts of credit cardholders, who have at least showed progress in their economic management this quarter, hopefully will pay off their balances sooner rather than later.
This is also for the account owner’s benefit, Paschel concludes.