Thursday, April 30, 2009

More debit card use than credit

Yesterday, VISA announced that for the first time, debit purchases exceeded credit transactions.

Stacey Pinkerd from Visa said, "The reality is that the vast majority of consumers want to pay as they go."

Tim Murphy from Mastercard: "A big group of consumers like the discipline that debit spending can bring them, and that is particularly relevant in this kind of environment."

Cliff Cook from USB: "Consumers are being more conservative in the way they manage their finances and that leads to a greater willingness to put transactions on debit cards."

Remember on March 10, when Meredith Whitney warned the world about the multi-trillion contraction in credit cards that was coming? Nobody cared, except for the bears!

I proposed a rather simplistic argument, in this post Frugality is In.

But do the foreclosure math-where the banks have actually taken possession of the homes.

268,532 foreclosures in 2006
405,000 foreclosures in 2007
850,000 foreclosures in 2008

1.5 million homes times $200,000 owed per home, equals a contraction of $300 billion of debt. And that's only with those homes that have been taken over by the banks. Does anybody really think these people are living on their credit cards? Through in 3 million homes that are in the foreclosure pipeline, and soon you'll have a nation of savers. Now you are talking a trillion dollars. They are saving, not just because they have become frugal, because it's trendy, as the NY Times reports, but because it is now a necessity. That's the new cash economy. They have been saving to acquire their next items with cash, as credit has been cut off to them. They are saving to consume! The contraction of credit, is actually pent up demand, being facilitated by saving. And that's the pipeline that the bears can't see!
http://aaronandmoses.blogspot.com/2009/04/frugality-is-in.html

Now yesterday the only increase that we had in the -6.1% GDP was these savers consuming!

Somehow, the bears and their algorithms, couldn't catch that simple fact.

Now Wall Street didn't catch that then, but maybe they will catch it now.

Especially since the "experts" at the card divisions recognize it!

4 comments:

Anonymous said...

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Credit Repair said...

It is good news about visa... I also use visa card..

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We can use visa card many place..