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GreenPath Debt Solutions Suggests Caution as America Returns to Credit Card Use
Consumers need to be vigilant against over-use

(FARMINGTON HILLS, MI – February 8, 2011) The Federal Reserve recently released data showing that Americans are starting to use their credit cards more, after more than two years of cutting back. The first increase in credit card debt since the financial crisis hit helped to boost overall consumer borrowing 3% in December, to a seasonally adjusted annual rate of $2.41 trillion, according to the Federal Reserve. It was the third straight monthly gain in consumer borrowing.

GreenPath Debt Solutions reminds consumers that, while consumers may feel comfortable in using their credit card more liberally in 2011, they still need to use the cards wisely. According to a recent GreenPath survey of nearly 1,000 respondents, only 2 percent paid off their credit cards in full each month. In addition, GreenPath debt management clients carried nine percent more average unsecured credit card debt in 2010 over 2009, increasing to nearly $30,000.

“While the Fed numbers may indicate that the economy is on the mend, our GreenPath statistics show that people who are coming to us are finding it necessary to use credit cards to help make ends meet,” said Jane McNamara, GreenPath President and CEO. “When we see so many people carrying higher credit card balances and struggling to make their payments, we find it important to remind consumers that they need to continue to watch their finances and debt very closely in 2011.”

GREENPATH 2010 FINANCIAL STATISTICS

GREENPATH CLIENT DATA 2010 VERSUS 2009 (37,000 clients)

UNSECURED DEBT

The average amount of new GreenPath debt management program client unsecured debt was 9% higher in 2010 vs. 2009.

• 2009 average unsecured debt: $27,361.56 
• 2010 average unsecured debt: $29,771.49

“We also found that the number of creditors our new clients owed decreased by six percent when comparing 2009 to 2010,” said McNamara. “This shows that more debt is spread over fewer creditors.”

INCOME

Average annual income for new GreenPath debt management program clients was 6% higher in 2010 vs. 2009, which indicates that higher-income consumers began to experience financial difficulties. 

• 2009 average annual income: $ 41,132.81 
• 2010 average annual income: $ 43,596.54

2010 GREENPATH FINANCIAL SURVEY RESULTS (999 online respondents from June-December 2010)

CREDIT CARDS

• 82% of respondents had at least 3 credit cards; 
• 50% had 5 or more credit cards; 
• 72% pay only the minimum payment amount on their credit cards or don’t make a payment at all, if they can’t afford the minimum; 
• 25% pay more than the minimum but less than the full balance; 
• 2% of respondents said they pay their credit card statement balance in full each month.