Credit Card Use Is on the Rise

Credit card use is on the rise
NEW YORK (CNNMoney) -- Credit cards are making a comeback.

At the end of 2008, more consumers were using debit cards than credit cards but now that trend has reversed, said Silvio Tavares, senior vice president at First Data, which processes card transactions for 4.1 million merchant locations.

"Credit is back in favor," he said. "Consumers have spent the last couple of years de-leveraging and reducing credit card use, but during the past month -- and since April [of this year] -- they've been using their credit cards more and are starting to return to pre-recession buying habits."

Purchases made with credit cards rose 8.2% in the first quarter of 2011, 9% in the second quarter and 10.6% in the third quarter, according to First Data. That compares with gains in debit card use of 9.6%, 8.3% and 5.9% for the same quarters.

And a growing number of holiday shoppers are already opting for credit this year. Payments made with credit cards on Black Friday jumped 7.4% from the same day a year earlier, while debit card use only rose 3.4%.

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Ah, to live the American dream... to be debt free and financially independent...
This article doesn't indicate if overall spending has increased... With unemployment remaining high, and more people dropping out of the job market, even temporarily, I doubt we are seeing a spending explosion or release of pent up demand.
I use credit cards and debit cards for almost all of my purchases, and I'm fortunate to have the income and savings that usually permit me to pay off the balances every month, except on larger charges that are more often than not business expenses, not personal.
It took a few years to convince my wife that it would be better for us to use those "cash back" credit cards and make one larger payment each month, than for us to write checks or pay cash for our purchases; but she is on board.
If you carry balances on your credit card, look to get cards with lower interest rates. If you pay your balances off every month, look to use those no annual fee cash back cards. If you are using debit cards, and can get a no annual fee credit card, get one and use it just like you used your debit card - and pay your balance off every month to avoid paying interest - this will improve your credit score. If your credit rating is down in the dumps, try to get store credit cards with low credit limits... Charge your normal purchases on the card and pay the balance off every month.
If you need to make a large expenditure, look for an installment plan - don't use a credit card...
Use your credit responsibly. Don't purchase things you cannot afford to pay for.

December 07 2011 at 9:27 AM Report abuse +1 rate up rate down Reply
James Stein

Even as Americans are using their credit cards more freely than they have been in a long time, the aggregate volume of credit card debt continues to decline. According to the Federal Reserve, the current level of outstanding credit card balances is the lowest in more than seven years and it is 18.9% below the peak reached in September 2008 when Lehman Brothers collapsed.

Moreover, just a couple of weeks ago Moody’s, a credit ratings agency, told us that in October Americans were paying back credit card debt at a rate of 20.91% of their overall outstanding balances, compared to a historical average in the mid-teens.

What all these statistics seem to be telling us is that Americans have become much more responsible with credit than they have been in a long time. As the numbers clearly show, more responsible with credit doesn’t necessarily mean using less of it. What it does mean is using it within one’s means.

December 06 2011 at 5:18 PM Report abuse rate up rate down Reply

It seems people never learn.

December 06 2011 at 3:38 PM Report abuse rate up rate down Reply

Hopefully this means that people paid off their cards, kept a zero balance for three months so they are no longer charged interest on new purchases from day 1, and are now using credit cards as "convenience cards" and paying off the total every month and.......getting points for thier purchases....

December 06 2011 at 3:19 PM Report abuse rate up rate down Reply

That's right you dummies, load up those credit cards! Wait till you want to retire!!!!!

December 06 2011 at 2:38 PM Report abuse rate up rate down Reply

Its a real shame. The American people were starting to get it. Using credit is bad. It should ONLY be used in emergencies. Using credit to purchase consumer items only weakens the nation and unfortunately makes countries like China stronger. If you cannot pay for something in cash, then learn to save until you are able to pay in cash. Big Banks and Wall Street wants consumers to buy with credit cards. Thats how they line their pockets for Gold. Again what a shame.

December 06 2011 at 1:59 PM Report abuse rate up rate down Reply
1 reply to gritzsl's comment

You are making an assumption that people are increasing their credit balances. While I'm sure some are, I doubt this is the case for everyone. I use credit cards instead of cash simply because they are convenient, but I also generally pay my balances in full, to avoid paying interest.

December 07 2011 at 9:31 AM Report abuse +1 rate up rate down Reply