Lowest Percent in 27-Year History Use Credit Cards Over Thanksgiving Weekend

Got cash? People are shunning credit cards like never before in history. Card issuers are fighting back with huge incentives to get people charging again. So far its not working.

The New York Times reports On Christmas Shopping Lists, No Credit Slips

The lowest percentage of shoppers in the 27-year-history of a national survey said they used credit cards over the Thanksgiving weekend, while the use of general credit cards like Visa and MasterCard fell 11 percent in the third quarter from a year earlier, according to the credit bureau TransUnion.

Britt Beemer, chief executive of America�s Research Group, a survey firm, said �The consumer really feels a lot of pressure from previous debts, and they just aren�t going to dig themselves into that kind of hole,� he said.

After the Thanksgiving shopping weekend, the group found that just about 17 percent were paying with credit � just over half of last year�s level and the lowest rate in the 27 years it has conducted a survey.

Some people are shunning credit cards for budgeting reasons, while others do not have a choice. More than 15 million Americans lost their cards because of strict credit-card regulations that were passed last year, or when issuers cut back on credit during the recession, said David Robertson, publisher of The Nilson Report, a credit card industry newsletter.

Shoppers using retailers� branded cards tend to spend more and visit stores more, said Robert S. Drbul, an analyst at Barclays Capital. So all are offering big incentives to get people to use plastic.

The Chase Freedom and Discover More cards, for instance, are offering $100 bonuses when new credit card customers spend a certain amount within the first three months, along with 5 percent cash back on holiday purchases at department stores and other categories.

Citibank is giving Dividend cardholders 5 percent back on spending at department, clothing and electronics stores through Dec. 31. Target is giving its cardholders a 5 percent discount on purchases, Neiman Marcus is advertising extra rewards points on most purchases on certain days this month, and Sears has been running a variety of no-payment, no-interest offers on its credit cards throughout the holidays.

�The credit card companies are falling all over themselves trying to make those rewards even better,� Mr. Robertson said. But, with customers moving to cash or debit, the companies are �simply less profitable,� he said.

Total Revolving Credit



Total Revolving Credit Year-Over-Year Percent Change



Attitudes Rule

As I have said many times, it's consumer attitudes Bernanke is fighting. And it's a battle he is losing.

For more on consumer credit, revolving and nonrevolving, please see Is The Credit Contraction Over?

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
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