Credit card spending could be restrained in coming months

The rate at which Americans have been using their credit cards has been picking up in recent months as the economy continues to improve, but new statistics show that this trend could change in the near future as consumer confidence fades.

New data from the Conference Board shows that consumer confidence slipped between April and May, and that could translate into lower credit card usage, both in terms of everyday usage and adding to a balance from one month to the next, according to a report from Fitch Ratings. However, there is the potential that continually loosening credit standards from the nation's top lenders might allow borrowers who have been eager to qualify for such accounts but unable to do so because of tighter restrictions might gain access to new lines of credit.

Further, the most recent statistics from the Federal Reserve Board show that consumers' revolving credit balances increased in March to $803.6 billion, and that was largely attributed to both higher prices gas, which is seen as a necessity purchase, as well as increased retail sales, the report said.

The good news for credit card lenders is that as consumers slash their spending in the wake of falling confidence, overall it will likely have a positive impact on instances of delinquency and default for major issuers, the report said. In recent months, retail credit card charge offs hit their lowest level in four years, while delinquencies dropped to a six-year low. Most major lenders have seen their own issued cards experience declines in delinquency and default in the past few months as well, keeping with trends observed over the majority of the last year and a half.

It's believed that consumer worries over the struggling job market, which is improving overall but doing so very slowly, and stagnant wages are contributing to the problem, the report said. Unemployment remained largely flat in April. As a consequence, many are curtailing the spending they may have been planning for the summer months as a means of keeping their finances under control.

Those who want to maintain healthy finances should also take the time to carefully review their credit reports. Doing so will help them identify any potential unfair markings that may be having a negative impact on their credit standings.