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While I agree with Bill Mann that financial institutions may be in for a huge "debt hangover", I think the following stat is meaningless:

"upward of 20% of [the gross national product in 2000--$11 trillion] at some point, was paid for by credit or debit card."

Personally, I pay for 90 to 95% of my purchases of goods and services (aside from household bills) with plastic. That's a whole lot more than 20%. But the key is that I pay my debt in FULL at the end of each billing cycle (as do most corporate card holders). Credit card companies may hate me, but their cards are just a convenient purchasing tool to me. As are debit cards, of course.

The interesting stat would be how much accrued and outstanding debt remains from the 2000 spending spree. For the credit companies, this is the kinda debt that will have them feeling intoxicated . . . and threaten to leave them hungover.
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I think the key statistic, at least IMO, was the assertion that credit card purchases had *increased* by 20% for the measured period, versus same period 1 year earlier. I suspect, like others here, that the fairly recent tendency to use credit cards for grocery and gasoline purchases explains some of it, just replacing cash use, and doesn't necessarily imply debt increase at all (but human nature dictates it would have some of that result), but a 20% increase in one year does seem rather staggering, hard to explain by just that kind of thing alone.

I don't understand why it is necessary to use a surrogate statistic anyway. Surely the powers that be have a method of measuring actual interest-bearing debt load per capita, rather than just charged purchase activity.

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>>I suspect, like others here, that the fairly recent tendency to use credit cards for grocery and gasoline purchases explains some of it, just replacing cash use, and doesn't necessarily imply debt increase at all (but human nature dictates it would have some of that result), but a 20% increase in one year does seem rather staggering, hard to explain by just that kind of thing alone.

I use to be a cash only guy. Only use credit cards for traveling or establishing a credit record. Then in this new economy, it now costs me money to obtain cash! And if I use a credit card, I get money back! It costs the same either way. In addition, by using a credit card I track all my expenditures and can download all these transactions into Quicken and fine tune my budget with more ease than ever (allowing me to invest more). With this much financial incentive, I'm surprised that the growth in purchases hasn't increased even more. 20% growth is just discretionary money being spent with a credit card. It would be interesting to see how much spending using checks has decreased. I think that is the flip side to this growth in credit card use.
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