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February 15, 2010 • Posted by Michael Ferrari

Credit Card Use Plummeting: Common Sense Soaring!

SmartyPig Just Say No

Call them old fashioned if you wish, but the number of people who just say "no" to credit cards has taken off, leaving in its wake new credit card data that suggests people are either smarter, more afraid or banks are still shying away from extending credit. Whatever the case, whatever is happening is working.

In a recent article about the slowing of credit card usage, USA Today shows us that "Revolving credit - largely made up of credit card debt - fell by nearly 20% in November, and that through October, the number of new credit card accounts was down 46% from the same period in 2008. Those numbers are staggeringly strong. What gives? People simply aren't up for the abuse at the hands of big banks anymore who will jack up rates at customers' most vulnerable points.

Sandra Block, the reporter for USA Today spoke to young people who are anti-credit card. What they had to say was as educated as it was eye opening. Why the drop in card usage: It's a "hassle." It leads to "huge debt." It's not a "rite of passage into adulthood." It's "not worth it." And what do they get in return for keeping the faith and staying true to themselves: "Fewer bills, headaches and fears."

We here at SmartyPig believe credit cards should be avoided for now, that people should save up of the things they want, take the same route their grandparents did and sock money away - especially in such a troubling economy, and not just for a rainy day. Vacations, electronics, new clothes, necessities, all can be done smartly and without risk.

While credit cards can be useful to build credit, we think people, especially younger people, should probably wait. After all, the difference between bad credit now and good credit later might be as easy as saying no to credit cards until you're ready. Or as the young Block interviewee Emily Maddox says: "I've known people who have had credit cards, and I've seen what can happen if you get behind and how hard it is to get out of debt. I don't like owing people money."

Mike Ferrari, SmartyPig co-founder
@mferrari

Tags: smartypig