Credit Balances Drop in January



08/03/2012, by CreditCards-Offer.com


January saw consumer credit card balances drop, surprising many analysts and ending the four month climb. Unfortunately, there was also bad news

While the news is good, there’s also a bit of less-than-ideal news that serves as a contrast and analysts say it’s important to maintain perspective. There’s been a significant surge in student loan debts. Further tempering the news is the time of the year; January often sees this kind of drop due, partially at least, to the sudden discipline Americans find following the holiday splurges. After the January $3 billion drop, the total revolving credit is slightly more than $800 billion.

Good News, Bad News

Experts remind the overall sales figures from the past nine months collectively remain disappointing, even with the holiday boost. One expert said,

The numbers on consumer spending have been on the weak side lately… in the past few months, they’ve been a little weaker than we had expected.

This same expert believes spending will “bounce back” soon. Many analysts also agree that consumers will be spending more, especially with vacation season quickly approaching. More Americans will be once again resuming their annual vacations, too. They may not be as long, especially when coupled with rising fuel costs, but there is expected to be a surge.

Economic Considerations

Finally, the overall economy is improving, albeit slowly, and any dramatic improvements aren’t likely. This, too, may play a factor in the efforts of paying down credit card debt. The unemployment rate dropped to 8.3 percent in January, which was also surprising news. And, again, that news is contrasted with the seasonal positions available through the holiday season. These numbers will balance back out as well if history holds true.

More reports on the economy as a whole are due later this week. It’s important to treat these figures as plot points and not an all-inclusive indicator that the shift has finally begun.

Consumers Torn

Does all this news sound confusing? If so, you’re not alone. Many consumers are conflicted over whether to begin spending once again or work to pay down their debt on the off-chance a second recession strikes. There are many factors to consider and the mixed news only lend to the growing uncertainty many Americans are voicing.
While credit card balances are dropping, the economy is getting a little better and borrowing and lending is beginning to increase. How long it will last, realistically, is a question no one can answer.







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