Credit Card Debt and Risk Reductions Lead to More Credit Card Offers
Credit Card Debt Down Yet Again
On Friday, the Federal Reserve published its latest data on consumer credit. The figures showed that, in March, credit card debt dropped at an annualized rate of 4.5 percent. In real money, that’s a $3.2 billion reduction in one month, which brings the total fall since 2008 to $105.5 billion.
So only another $852.6 billion to go before everyone has a zero balance.
Credit Risk Index Improving
A couple of days before the Fed’s numbers were released, TransUnion, one of the big-three credit bureaus (and thus some of the guys who determine your credit score), unveiled an update for its Credit Risk Index. This fell for the first time since 2008, signaling a possible, long-awaited turnaround in the creditworthiness of consumers. TransUnion’s global chief scientist [no, really; that’s his job title], Chet Wiermanski, commented in a statement:
We are cautiously optimistic that the Credit Risk Index will continue to experience small declines as consumers keep reducing their debt burden and remain current on their existing credit obligations. After experiencing one of the most tumultuous economic periods since the Great Depression, it is possible that consumers may be reluctant to take on significant debt in the near future, which could possibly temper an economic recovery.
Credit Card Trends: Consumer Spending Up
On the very same day that TransUnion was admitting–without a trace of the embarrassment that would have been appropriate–that it employs someone it calls a global chief scientist, Discover Financial Services (yes, the credit card company) revealed an index all of its own. Presumably, senior executives who work for financial services companies regard indices rather as they do McMansions–desirable, collectible status symbols.
Anyway, the press release concerning the Discover U.S. Spending Monitor says:
The Monitor – a poll of 8,200 consumers that tracks consumer confidence and spending intentions on a daily basis – jumped 5.5 points in April to 91.5 (based out of 100), the highest the Monitor’s index has been since November 2007. Overall, 34 percent, the most ever, believe economic conditions are improving.
Credit Card Trends: Offers Up
Meanwhile, the good people at Synovate (a company that “generates consumer insights that drive competitive marketing solutions”) bravely soldiered on–despite the shaming lack of visible indices–to publish the Synovate Mail Monitor last week. This reveals that American households received in their mailboxes some 481.3 million credit card offers during the first quarter of this year. That’s 29 percent up on the same period in 2009.
So which credit card companies were responsible for this large upswing in offers? Well, Chase led the way, followed by Capital One, and–surprisingly after the company so recently threatened to withdraw from the U.S. credit card market–HSBC.
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