Bankruptcy

Study: We?re Using Our Credit Cards Less

By guest-writer

A study conducted last year by the Javelin group reportedly found that, as a nation, we?re cutting back on our credit card usage. The study apparently found that, while 87 percent of consumers polled in 2007 said they?d used a credit card in the last month, only 56 percent answered yes in 2009.

And, according to sources, the researchers think that number will fall again in this year?s survey.

Potential Benefits of Lowered Credit Card Use

While the finding itself suggests that Americans are responding to the weak economy by shifting their primary payment techniques, the larger potential effects of our changing behavior are interesting as well.

• More attractive cards: One potential side effect of decreased use of credit cards would be that credit card issuers could start trying to lure customers back with more enticing card offers, which could include rewards programs, low interest rates, versatility or a number of other options. This is by no means a guarantee, but it?s something to watch out for it you?re in the market for a new credit card.
• Less personal debt: A move toward debit cards and prepaid cards could lead us to lower levels of personal debt. While this would have to be a broad and fairly long-term shift in order to significantly reduce debt, such a shift could even affect the number of personal bankruptcy filings.

Credit Cards and Bankruptcy: The Connections

It?s important to understand the connection between bankruptcy and credit cards in any examination of our nation?s credit habits, especially during a recession, when more Americans might be pushed to seek bankruptcy protection. Here?s a look at some key links:

• Credit card debt in bankruptcy: Many bankruptcy filers have significant credit card debt when they file their bankruptcy petition. And, because credit card debt is not very high-ranking among debt types in the eyes of the court, a significant portion of those who enter bankruptcy with such a burden find some or all of their debt discharged.
• Credit cards after bankruptcy: Because high credit card bills lead many bankruptcy filers to financial distress, some are skittish about applying for credit cards after they exit bankruptcy. But credit cards, when used well, can actually help strengthen your credit rating and thus help you ?prove? to potential lenders that you?ve adopted healthy financial habits.

Is Your Credit Card Use Healthy or Risky?

If you?re worried about your credit card bills or if you?ve found yourself depending more and more on your credit card to make ends meet, you may be heading toward financial upset. And, in many cases, taking action sooner rather than later can make the process of financial reform much smoother.

To get an objective opinion about your overall debt levels, consider consulting with a bankruptcy attorney, who may be able to help you get on the path to healthy finances once and for all.

Full post as published by The Bankruptcy Blog on September 13, 2010 (boomark / email).