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Studies: Credit card use, and debt, starts to rise again

Consumers all across the country have been reducing their reliance on credit cards for a number of years as the economy has struggled through the recession and its aftermath. Credit card debt can be a difficult animal to overcome for many Cincinnati area consumers, especially with the current state of the job market. Three new surveys, however, show that as the holiday season moves into full force, American consumers are turning to credit again to make purchases.

Some experts suggest that the ease of online sales is part of the reason consumers are returning to using credit cards to purchase goods. The director of payments research at a Javelin Strategy and Research, a global financial services industry research firm says, "consumers appear to have halted their belt-tightening and bank incentives to use credit cards rather than debit are gaining appeal."

The researcher says that online shopping, especially during the hype of perceived events such as "Cyber Monday" underlies an increase in consumer spending. Javelin says, "Frenzied purchasing periods such as Cyber Monday can cause consumers to throw cautionary spending patterns to the wind and take advantage of the 'deal' phenomenon." A Javelin survey suggests that consumers actually spend more when using credit cards than when other types of payment options are used to purchase goods.

A different survey says that 24 percent of American consumers expect their credit card debt load to increase during the holiday season this year. The survey, conducted by an online credit monitoring and management service, shows a sharp increase in the percentage of American consumers that say they plan to use credit to make purchases during this holiday season. This year's data show a 19 percent jump from the numbers posted last year.

Western Union conducted a survey through Wakefield research that indicates American consumers say overspending this holiday season is their number one concern. That concern is reflected in the Javelin research. The Javelin researchers say that although increased credit card use is expected to generate higher spending this holiday season, which may be good for the overall economy, the increased credit card debt could place many consumers in financial distress.

Source: Live Science, "Consumers Worry About Rising Holiday Credit Card Balances," Jeanette, Mulvey, Nov. 28, 2011

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