Credit Card Use, Economics, and North Dakota Winters

"More than 8 million drop out of credit card use"
AP, via Breitbart (November 29, 2010)

"More than 8 million consumers stopped using credit cards over the past year. The decline stems from a combination of consumer choices and bank actions.

"An analysis by credit reporting agency TransUnion found that use of general purpose credit cards bearing MasterCard or Visa logos, or issued by Discover or American Express, fell more than 11 percent in the third quarter, compared with the July to September period last year.

"About 62 million people now have an active card, compared with 70 million a year ago.

"The Chicago company found that consumers in the subprime category, or those with low credit ratings, were believed to be without cards mostly because they were shut down by banks after payments fell behind or balances were written off...."

The Lemming's household has a credit card account. It sure beats carrying a wad of cash to the grocery, for one thing. We're probably not 'typical' credit card users. For one thing, we pay the balance each month. No great virtue: this household can't afford the interest.

Turns out, debit card use is increasing. Maybe.

Back to the Breitbart article.

"...[TransUnion's financial services business unit vice president of research and consulting Ezra] Becker said the balance increase from the second quarter is mostly an indication that consumers are still under stress. Prior to the recession, he said, carrying a credit card balance was more of a lifestyle decision reflecting spending choices. 'Now it's out of necessity,' he said. 'In times of financial distress, nobody wants to carry a balance. Where people can afford to pay things down, they do.'..."

Maybe we aren't all that unusual, after all. The article says that credit card delinquencies "are in a normal range." Presumably:

"...That's partly because with unemployment high, credit cards became more important for cash-strapped consumers who needed them to purchase necessities like groceries and gasoline, so they kept their payments current...."

Finally, this bit of demographic data:

"...The third-quarter delinquency rate was highest in Nevada, at 1.28 percent, and Florida, at 1.09 percent. These two states have also been among the hardest hit by the housing crash and foreclosure crisis. Late payments were lowest in North Dakota, at 0.48 percent and South Dakota, at 0.53 percent."

The Lemming has lived in North Dakota. This is a dubious argument, but I've wondered if North Dakota weather - particularly the winters - tends to weed out folks who aren't fairly good at planning ahead.