Summary
Recent studies indicate that the US consumer and small business usage of their existing lines of credit has declined.
Analysis
This decline is noted as the very first time this condition has occurred. Again with studies, it is important to clearly define your own specific requirements, and clearly understand exactly which metrics were included in the study.
Many banks have eliminated or reduced credit lines, many borrowers have walked away from their debt - so the statistics must be leveled accordingly.
However, I have had direct experiences where the user which has always repaid their debt, and is a good credit risk, both small business and consumer credit card holder has complained of the spiralling credit card interest rates, and opted to utilize debit cards only, and completely avoid the credit card.
Seems to me, that is a case of beware what you ask for; since more consumers are saving their hard earned income, not spending and racking up large sums of interest targeted principal, the credit providers might have another issue to contend with as we go forward out of the high default rates.
Mark Mariotti consults with leading institutions through GLG
Analyses are solely the work of the authors and have not been edited or endorsed by GLG.
