Credit card withdrawal – Banks pull the plug on consumer revolving debt. Credit card debt outstanding contracts from nearly $1 trillion to $800 billion. Bankruptcies on the rise even with tougher bankruptcy laws.
When people talk about the credit bubble they typically refer to the housing bubble and the trillions of dollars of debt secured by real estate. Yet the credit bubble also applies to student loans, government debt, and those pesky wallet hugging credit cards. The American economy has embraced credit cards as quickly as apple pie or a weekend picnic at the park. During this holiday season many people pulled out the plastic and loaded up on debt to face a hefty bill come 2011. While banks have generously gorged at the taxpayer bailout trough, they have slowly put a tourniquet on the amount of credit Americans can access. In other words banks have applied standards to American consumers that they are not willing to adhere to themselves. The total amount of credit card debt outstanding has contracted vigorously since the debt crisis emerged.