We won’t be buying the same way we did before.
As the economy waivers between recovery and recession, people are spending less on their credit cards and using cash and debit cards more.
The recent recession has changed many consumer’s buying habits. The last time credit card use increased was August 2008. The Federal Reserve Board reported earlier this month that credit card borrowing fell at a 6.3-percent annual rate in July. A survey by Javelin Strategy & Research, published in USA Today, cites economic uncertainty, less available credit, and incentives to use debit over credit.
This is great for many who ran up debt in past years and fell victim to the recent credit crunch. Consumer buying habtis have changed.
Financial guru Dave Ramsey has advocated the elimination of all credit card spending by consumers. He has seen an uptick in attendees at his seminars (which will NOT accept credit cards for online payment). His mantra is: “Act your wage!”
The bottom line is: we won’t be buying the same way we did before. Dan Celia, host of “Financial Issues” on American Family Radio says, “People realize that this debt will come back to haunt them in times of troubles like we’re going through now.” Baby boomers are too close to their retirement to go through another dip in their finances. They won’t do it again. They are buying only what they need and paying for it with cash or debit cards, where the money exists – not on credit with months and years of payments.
Their habits are influencing their children’s and grand children’s spending habits as well.
Some industries have failed to adjust for the change in spending. Just as many were beginning to accept credit cards, the bottom fell out. They were caught unawares for the difference in consumer habits.
This change begs several questions to us today:
- What is your business doing to make it easier for people to pay less through credit and accept good old cash or debit cards?
- Are you prepared to assist customers who don’t want to make hefty payments on credit card interest?
- If spending is different, how are you adjusting differently?
One thing is certain: we won’t be spending the same way we have before!