Thursday, March 21, 2013

Another Negative Unintended Consequence Of The New Credit Card Rules; An Elizabeth Warren Contribution To A Weaker Economy

Posted by Milton Recht:

From Bloomberg, "Plastic-Shy Young in U.S. Spur Move to New Credit Data" by Jeanna Smialek
[There is] a growing reluctance among young adults to use plastic for everyday purchases. Thirty-nine percent of undergraduate students between the ages of 18 and 24 owned a credit card in 2012, down from 49 percent in 2010, a Sallie Mae and Ipsos Public Affairs survey found. And young adults who do have credit cards are carrying smaller balances: A median of $1,600 in 2010 compared with $2,500 in 2001 for under- 35 households, according to Federal Reserve data.

The trend, rooted in stricter lending rules and weaker job outlooks for young Americans since the 2008-2009 recession, has implications for the strength of the economy. As people in Frohne’s age group eschew plastic, fewer are building the credit histories that would help them to gain financing for purchases of homes and cars that are critical to economic growth. [Emphasis added.]

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