Debt Consolidation Loans to Suffer as Consumers Live Frugally? |

The evidence continues to mount that U.S. consumers are moving toward a future of fewer debt consolidation loans and greater savings. According to the latest monthly report from the Federal Reserve Board, consumer revolving credit fell again in April. This is significant because it marks the 19th consecutive month in which this debt, made up mostly of consumer credit card debt, has fallen. Before the Great Recession began, no one would ever have predicted that U.S. consumers could have been so frugal. After all, the U.S. consumer – at least since the days of the ‘80s – hasn’t exactly been known for their ability to delay instant gratification.

Credit Card Debt Falls

The fear was that consumers would need to turn more than ever to debt consolidation loans once the nation fell into recession. The theory made sense: Consumers who lost their jobs or had their hours slashed, would have fewer dollars available. They’d then run up more debt on their credit cards in the hopes that their economic situation would eventually improve. But that hasn’t happened, at least not according to the Federal Reserve Board’s numbers. Consumer revolving credit now stands at $838 billion. That may still seem like a lot of revolving credit out there. Consider, though, that in October of 2008 this figure stood at a far higher $976 billion. That’s right, since that month, U.S. consumers have managed to shave $138 billion off the total amount of revolving credit. And they’ve somehow done this during some of the worst economic times in U.S. history.

A More Frugal Nation?

Are we seeing the birth of a more frugal nation? Will trips to the mall be made only out of necessity rather than to pass the time? Will consumers shop for the best deals and put off purchases until they can afford them? That’s hard to predict. But the Federal Reserve Board data does point to consumers who are embracing saving rather than spending. The board reported that consumer spending fell in April while consumer saving rose. That last bit is important; it’s the first that consumer savings rose in four months.

What Lies Ahead?

Of course, no one can predict how U.S. consumers will react once the economy’s recovery picks up speed. They might go back to their free-spending ways. They might again run up their credit card bills. And they might again turn to debt consolidation loans to help them deal with all their new debt. Or, as the Federal Reserve Board numbers seem to say, U.S. consumers might have learned their lessons during this worst economic slump in decades: Saving money is important. And sometimes it makes good financial sense to put off those big purchases.