Between the first quarters of 2009 and 2010, Americans paid $72 billion more to reduce their credit card debts than they spent on the cards, according to a study by the credit monitoring bureau TransUnion. As a result, the average credit card borrower saw their total debt obligations slip $601 to $5,165 from the previous year’s total of $5,776. That trend continued into the first quarter of this year, when the average borrower owed just $4,679 on their credit cards, a low not seen in 10 years.
“Many people in the financial services industry believe charge-offs have been the leading factor in declining credit card debt since the start of the recession,” said Ezra Becker, vice president of research and consulting in TransUnion’s financial services business unit. “In fact, some have stated that charge-offs account for the entire change in card balances over the past two to three years. In reality, the dynamic is more complex. Our analysis shows that consumers have made a concerted effort to pay down their credit cards during these uncertain economic times.”
However, rising prices for necessities such as food and gasoline may have thrown a wrench in the recent trend, forcing consumers to rely more on their credit cards for these purchases and once again boosting their balances, the Seattle Times reported.