New Research Shows Americans Cutting Back
A recent study shows a cutback in consumer spending habits…
A report released by Javelin Strategy & Research, a leading provider of independent financial research, shows that Americans are cutting back on credit card usage and shopping more conservatively due to the economic downturn and ramifications from the mortgage crisis, rising energy and food prices. The report also shows that consumers are finding it more difficult to pay off their existing credit card balances. “The sharp decline in credit card spending challenges the popular belief that Americans are charging basic goods in order to sustain their quality of life,” said Jim Van Dyke, president of Javelin Strategy & Research. “Consumers are making deliberate cutbacks like shopping at superstores, eating out less and watching what they charge. We believe this is because most people have already been impacted by the downturn or they’re anticipating that we haven’t seen the worst of it. It’s very cautious behavior.”
The study of 1,500 people representing equal proportions of gender, age and income as compared to the overall U.S. population, also made use of an online survey of credit card industry executives in May 2008. Not only are consumers cutting back, but the survey also found significant cutbacks among credit card issuers, as well. Credit card solicitations were cut back by seven of ten issuers in the study; 62% have cut back lines of credit to current consumers. The report also found increasing pressure on middle-income ($25-49K) and consumers ages 35 to 64, resulting in a decline in luxury spending.
Key survey respondent results include:
- 37% are using credit cards less often.
- 28% find it more difficult to pay off their credit balances
- 45% have less to contribute to savings
- 57% have changed how often they dine out
- 46% now shop at more discount retailers like Wal-Mart™ and Target™
“From declining consumer use, rising risk levels and possible new merchant fee legislation, the credit card industry is taking several hits right now, which could have unintended consequences on Americans,” said Bruce Cundiff, director of payments research and consulting at Javelin Strategy & Research. “If the economy continues to decline, consumers will likely be forced to turn to credit but find it unavailable when they need it most.”
Learn more about the study, “Credit Card Issuer Profitability in a Difficult Economy,” at:
http://www.javelinstrategy.com/
