Consumers shredding credit cards
October 13th 2009 16:53
finance signature
From: Examiner.com
Mad as hell and not going to take it any more, consumers are outraged over bank and credit card issuer behavior, so they dumped credit faster than economists expected last month.
Consumers abandoned often expensive credit card debt fastest, lopping 13.1 percent or $9.91 billion off consumers' total credit card debt in August, a record 11th straight month of declines, according to the Federal Reserve's "Consumer Credit" report.
Overall, consumers slashed $11.98 billion in borrowing in August, a 5.8 percent annual rate of decline that bested economists expectations.
Non-revolving debt, including auto loans, personal installment loans, dropped 1.6 percent.
With unemployment at nearly 10 percent and higher than it has been in more than a quarter century, consumers who are unemployed and others without job security lack confidence in the economy and don't have an option other than to squeeze spending.
Consumers, by a ratio of 4-to-1, recently told Consumer Reports they are charging less than they did last year.
More and more often, consumers are fuming over higher interest rates; slashed credit limits; overdraft fee gouging and other questionable financial institution behaviors.
"The level of public anger about card issuers shows in the results of our nationally representative survey of 1,211 Americans, conducted in July, as well as in scores of irate letters and e-mails we've received, reported Consumer Reports in the recently released November 2009 issue.
Nearly 1 in 3, 32 percent said they paid off and closed a card since January 2008. Half of them said they did so in direct response to the actions of credit-card issuers, such as cutting limits, hiking rates, or imposing fees.
"You have to wonder whether credit-card companies really want to keep their customers."
Among those surveyed 21 percent said they've been unfairly treated by card companies.
Credit cards is one of the lowest rated services the independent consumer goods and services rater monitors. Only 41 percent of consumers surveyed indicated high satisfaction with their card issuer.
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