Conventional wisdom says that consumers have been aggressive about paying down their credit card debts, and as evidence, the Federal Reserve's Consumer Credit release known as the G19 release is often cited. Specifically, the category known as revolving debt which is comprised largely of credit cards, declined by $92 billion in calendar year 2009. But looking at a separate Federal Reserve release on charge-off rates shows that commercial banks charged off -- or wrote off as uncollectible -- more than $80 billion in credit card debt during 2009.
Further, the G19 totals for revolving debt reflect not just the balances revolved each month but also those that are paid in full by cardholders at month-end. Many of these cardholders are charging less to their cards each month, either due to their own spending cutbacks or because they've had their credit lines trimmed and are resorting to other methods of payment.
So I ask you, are consumers really paying down credit card debt? The evidence shows this to be more urban legend than reality.
Tell me your story. How much credit card debt do you have now versus one year ago? And for you rewards-card-toting consumers that faithfully pay your balances in full, are any of you charging less to your card each month?
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