Americans paid billions more in reducing debt

While many financial experts have largely attributed continual declines in credit card debt seen in the last several months to risky credit card borrowers no longer having access to new accounts, a study shows that may not be the case.

Between the first quarters of 2009 and 2010, consumers paid $72 billion in payments on their credit card accounts over what they purchased on them, according to a new study from the credit monitoring bureau TransUnion. On a per-borrower basis, this represents a decline of $601 per person, from an average balance of $5,776 to $5,165.

“All things being equal, we believe that consumers, especially younger adults, will continue to have an increasing preference to use their debit cards over credit cards,” said Steve Chaouki, group vice president in TransUnion’s financial services business unit. “However, the credit/debit card landscape is still in transition. Regulatory and legislative proposals either currently under discussion or recently enacted will impact the industry significantly and could alter this payment preference trend.”

Credit card debt is typically charged off as being uncollectable by lenders when it falls 90 days or more behind on payments.