Credit Card Debt Cut: The Reason May Surprise You

Posted by administrator | 18/06/12 | Tagged Credit Card Debt

Credit Card Debt Cut: The Reason May Surprise You
News from NPR:

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A Federal Reserve study showing that Americans lost wealth in the Great Recession turned up another, perhaps more surprising, result: Credit card debt fell sharply.

“The percentage of families using credit cards for borrowing dropped over the period; the median balance on their accounts fell 16.1 percent” between 2007 and 2010, the report concluded.

The data appeared Monday in the Survey of Consumer Finances, a widely followed source of information about the financial condition of American families.

The Fed study turned up two particularly dismal measures of financial health:

1) Median family income fell 7.7 percent, to $ 45,800 in 2010 from $ 49,600 in 2007.

2) Median family net worth fell 38.8 percent, to $ 77,300 in 2010 from $ 126,400 in 2007.

So if income and net worth were tumbling, wouldn’t people have been borrowing more to put food on the table and shoes on the kids?

To the contrary, “the decreased prevalence of credit card debt outstanding was widespread and noticeable across most of the demographic groups,” the Fed study found.

Cr…………… continues on NPR

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Billing city for private car’s gas ‘bad judgment,’ ex-police chief says
News from Los Angeles Times:

Costa Mesa’s former police chief confirmed that he was suspended and ultimately resigned from the city after an investigation found that he had charged gas for his personal vehicle on a city credit card.

“Bad judgment? Yes,” said Chris Shawkey, 52. “I should’ve gone to the city manager and said, ‘What do you want me to do?’ and work it out that way. But that was really the only thing outside of my employment agreement.”

Expense reports submitted to his department over his four years — he was hired in 2006 — show he charged hundreds of gallons of gas across California, Arizona and other states.

But that was all within his right, Shawkey said, pointing out that his employment agreement seemed to allow the practice.

That agreement granted the Arizona transplant a city-leased vehicle and unlimited mileage, but did not specify that he only could use the card or vehicle on city business, he said.

However, Shawkey acknowledged that he improperly used the card when he was traveling in his personal vehicle, an SUV, about 10 times, by his estimation. He said his city-issued Ford 500 wasn’t big enough for his wife and kids.

The billings were approved by the Finance Department and signed off by his subordinate, then-Capt. Ron Smith.

“I didn’t hide the receipts,” an exasperated Shawkey said. “I turned in the receipts. What am I hidin…………… continues on Los Angeles Times

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US consumer cut back on credit card use in April
News from Fox News:

U.S. consumer borrowing increased more slowly in April, restrained by a sharp reduction in credit card debt.

The report suggests Americans may be resisting their credit cards after seeing employers pull back on hiring this spring.

The Federal Reserve said Thursday that consumers increased borrowing by $ 6.5 billion in April. That’s just half the March gain.

The increase was driven by a $ 9.96 billion rise in a category that measures auto and student loans. That offset a $ 3.4 billion drop in credit card debt, the first decline since January.

Total borrowing rose to a seasonally adjusted $ 2.55 trillion. That was slightly below the all-time high of $ 2.58 trillion reached in July 2008, eight months after the Great Recession began.

Consumers had begun to use their credit cards more freely at the start of the year, a move that coincided with solid job gains over the winter. But hiring slowed sharply in April and May, which may have forced some to cut back on their plastic.

Employers added just 69,000 jobs in May, the fewest in a year, and just 77,000 jobs in April.

The economy added 252,000 jobs a month from December through February. Since then, job growth has slowed to a lackluster 96,000 a month.

April’s borrowing increase was the smallest in six months. Economists said that…………… continues on Fox News

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