Credit Limits Lowered Forcing People to Look to Cash Advances

Consumer borrowing cut by credit card companies yet again

Cash advance loans may have to aid consumers a bit longer since credit card companies are limiting borrowing drastically. According to the AP, "Consumer borrowing plunged in March at the fastest pace in 18 years as Americans put away their credit cards and hoarded cash amid the worst recession in decades ." The Federal Reserve showed that borrowing dropped 5.2% in March, which is the biggest dip since the fall of 1990. In dollars and cents, that means that borrowing is down by approximately $11.1 billion, a drop that hasn't been seen since 1943.

In response to the recession, the personal savings rate moved up 4.2%. What this tells analysts is that people are spending less and trying desperately to replenish their savings. Consumer spending fell 0.2%. This wouldn't be so bad if the country weren't in a recession that needs to be refueled. Consumer spending accounts for approximately 70% of overall economic activity.

The stimulus

Most consumers are waiting the recession out cautiously, hoping the $787 billion stimulus program will work its way through the economy and bring about economic growth. Unfortunately, they are not spending, the very action that could bring the economy to an end sooner. Most consumers are focusing on other things. Anne Radman of Nashville, Tennessee stated, "We don't have money to spend right now. We are using all our extra money on bills and paying off our credit cards." Radman is not alone, because many consumers are overwhelmed with bills. They are using cash advance loans like never before. They are penny-pinching like their parents did. They are finding new ways of saving money. Although much of the recession depends on A mericans buying again, it doesn't seem like this will be happening in the near future. ... click here to read the rest of the article titled "Credit Limits Lowered Forcing People to Look to Cash Advances"