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Credit Card Spending Fell by $5 Billion in the First Two Months of 2012

Friday, May 4, 2012 8:20 AM


NEW YORK, NY -- (Marketwire) -- 05/04/12 -- Despite consumer spending, which makes up 70 percent of U.S. economic activity, rising at a faster pace in almost a year Americans are charging less on their credit cards. This has become quite troublesome for credit card companies as they rely on processing fees and interest charges to generate revenue. Five Star Equities examines the outlook for companies in the Credit Services Industry and provides equity research on Discover Financial Services (NYSE: DFS) and American Express Company (NYSE: AXP).

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While card companies are benefiting from an increase in card use by overseas customers and the wealthy the average American has held back. According to numbers releases by the Federal Reserve credit card charges in the U.S. decreased by $5 billion in January and February combined. The recent financial crisis and recession have led Americans to save more and spend less. With many still uncertain about the state of the U.S. economy many consumers are just not ready to rack up new credit card debt. In February consumers held $799 billion in credit card debt, which was 15 percent less than what they held during the first month of the "Great Recession."

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Consumer confidence was flat in April, as more people saw their personal finances improving, while the effect of higher gas prices may have contributed to declining attitudes about the overall economy. The Discover U.S. Spending Monitor, a nearly 5-year-old daily poll tracking economic confidence and spending intentions of nearly 8,200 consumers throughout the month, climbed 0.2 points to 96.7. The Monitor remains at its highest level since October 2007.

American Express recently reported first quarter net income of $1.3 billion, up 7 percent from $1.2 billion a year ago. Diluted earnings per share were $1.07, up 10 percent from $0.97. Consolidated total revenues net of interest expense rose 8 percent to $7.6 billion in the first quarter of 2012, from $7 billion a year ago.

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(Source: Market Wire )
(Source: Quotemedia)


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