December 13, 2009Consumer spending - whether it's with cash or credit - makes up as much as 70 percent of the nation's economy
Consumers cut back their use of revolving credit - made up of credit cards - to the tune of $6.95 billion in October, or 7.23 percent less than a year earlier, data from the Federal Reserve Board showed last week. Meanwhile, the delinquency rate on credit card loans - those past due 30 days or more and still accruing interest - was 6.58 percent in the third quarter, a record for the industry.
In a survey by the Federal Reserve released in November, banks reported that they expect to tighten - or have already tightened - many terms on credit card loans for borrowers, including those with good credit.
In a survey by the Federal Reserve released in November, banks reported that they expect to tighten - or have already tightened - many terms on credit card loans for borrowers, including those with good credit.
"Even now, we have forces saying spend, spend, spend," said Tahira Hira, an Iowa State University professor of personal finance and consumer economics.
"We depend on that for the economy to bounce back. We are looking for the consumer to spend."A pullback on overall spending "is a very difficult lesson for the country," Hira said. "We have a whole generation here which hasn't learned how to live within their means. And now we are being forced to come back within our means, and some people don't have means."
"We depend on that for the economy to bounce back. We are looking for the consumer to spend."A pullback on overall spending "is a very difficult lesson for the country," Hira said. "We have a whole generation here which hasn't learned how to live within their means. And now we are being forced to come back within our means, and some people don't have means."
"The credit card industry is not going to be profitable this year, and is projected to lose billions of dollars in 2010 as a result of the overall business conditions," McCoy said.
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http://www.desmoinesregister.com/article/20091213/BUSINESS/912130333/Credit-rules-mean-pain-for-industry-consumers
