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Bloomberg reports that a study by First Data Corp. indicates that cash-strapped US consumers are bring out their credit cards to pay for basic necessities, with “dollar volume of purchases charged grew 10.7 percent in June from a year ago, while the number of transactions rose 6.8 percent.”

Credit card transactions are growing faster than debit card transactions, indicating that people - especially the unemployed and underemployed - are using their credit cards and delaying payment for such things as gasoline, food and other necessities.

According to Bloomberg, “The figures are in synch with data from the Federal Reserve. Revolving credit, primarily credit card balances, increased by $3.37 billion to $793.1 billion in May from an almost seven-year low of $789.8 billion in April, figures from the central bank showed. The gain was equivalent to a 5.1 percent increase at an annual rate.”
KC's View:
A recent truism has been that one of the benefits of the recent recession has been that people were playing off their credit cards and trying to reduce their debt. Maybe it is inevitable, but it would be a shame if that trend reverses simply because of the length of the economic downturn.