Borrowers focused on paying down debt

06.19.09
By Lewis Green

With consumers increasingly looking to the government for assistance these days - whether it is for help negotiating terms on mortgages to avoiding foreclosures to job search resources - the recession is taking a toll on the American family.

Households are making some major lifestyle changes in an attempt to keep credit card debt to a minimum and replenish diminished savings accounts.

Simple tasks like clipping coupons and dining in on a regular basis are helping families stick to a budget, keep their homes and manage their debt.

The government acknowledges this amped-up effort on the part of households, saying that a weak labor market and declining wealth are driving factors behind the changes.

In fact, the Treasury's latest monthly bank lending survey - the most recent data is from April - was released this week and shows that consumers have made progress in paying down debt.

Total outstanding consumer loans held by banks decreased by 1 percent overall in April. That means consumers made progress making payments on mortgage loans, home equity lines of credit and credit card loans.

The survey data also confirms that consumers are trying to keeping credit card debt to a minimum. Used and unused commitments for credit cards and home equity lines of credit remained largely unchanged in April.

However, struggles for consumers still remain on the employment front. Economists with the Conference Board, which produces a number of economic indicators, said that although the housing market is showing signs of stabilization and the recession is "losing steam," employment will take longer to recover.

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