Report shows Americans using credit cards more responsibly

Consumers More Cautious With Credit Card Debt

According to the National Federation for Credit Counseling, there has been a shift in the way Americans manage their credit card debt within the last decade. Not only do fewer consumers have credit cards, they are being used more judiciously, and debt is being resolved more quickly.

Today, only one in three U.S. households currently carries a credit card debt over from month to month, a 10 percent reduction from 2009 levels. The percentage of balances below $2500 has increased by 4 percentage points over last year as well. This is particularly important to note, especially as consumer credit reached a record high of $20.7 billion in June, beating estimates by experts.

“Coming out of the financial crisis, consumers have been more responsible about thinking about how to approach their credit card debt,” Richard Cordray, who heads the Consumer Financial Protection Bureau, said in a press release. However, this does not mean that consumers are losing confidence in the return of the market.

In fact, in a recent survey by the National Foundation for Credit Counseling and NerdWallet, a personal finance website, 92 percent of Americans said they were very or somewhat confident in their most recent big financial decision, which included opening a new credit card or buying a car.

These findings allow lenders to gain a better understanding of the mindset of their audience and current approaches to credit management. While there seems to have been gains in the financial responsibility of consumers, this does not negate the need for effective risk management: the survey also found that 50 percent of respondents continue to spend without a budget, and 70 percent are worried about their personal finances.

To take advantage of emerging opportunities while protecting against bad debt, lenders need to be aware of current market trends and how they may impact the value of their current scoring solutions. As risks change and new market conditions arrive, the ability to quickly adapt scoring models will help foster sustainable growth.

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