Credit cuts

With credit card reform legislation taking effect in February, Americans are making changes in the ways they use their cards with a focus on reducing debt, according to the latest results of the First Command Financial Behaviors Index.

The Index’s December survey reveals that 32% of Americans say they are using their credit cards less than they were a year ago, and only 11% of respondents say they have increased their usage of credit cards – continuing a trend toward more responsible finances that has emerged during the recent economic turmoil.

“The consumer protections of the Credit Card Act of 2009 are coming into existence at a time when many Americans have already taken positive steps to ensure their own financial well being,” Terri Kallsen, executive vice president of strategic development at First Command Financial Services, said in a statement. “Changes in credit card usage are an important indicator of a larger yearning to reduce consumer debt. In effect, many Americans have enacted their own reform program by keeping their cards in their wallets.”

SURVEY FINDINGS
• Using their credit card less (22%)

• Paying more of their balance each month (15%)

• Paying off their balance in full each month (15%)

• Permanently paying off all their credit cards (13%)

• Americans are also reporting the following changes to their credit card terms: increased interest rates (40%); increased late fees (20%); decreased credit limits (17%); and added late fees (11%).

• In December, 40% of survey respondents stated that the economy had hit rock bottom and was on its way to recovery, up strongly from 35% in November.

• Also, 27 percent said they are in better financial shape than one year ago, up five points from December 2008. And though 40% of Americans say they are worse off than one year ago, that figure represents an eight-point drop from December 2008.