Consumers postpone paying off credit card debt

05.21.09
By Sarah Beldo

It seems the economic downturn really has reorganized Americans' financial priorities, at least in the short term.

According to Securian Financial Group's 2009 Survey of Financial Values and Debt, a majority of consumers are currently focusing on saving money in case of an emergency and are also trying to spend and borrow less.

The number of people who consider short-term savings a priority has risen by 8 percent since the last time the survey was given - 16 months ago. Securian suggests this is a direct result of the recessionary mindset.

However, there is also evidence that people may be devoting money to an emergency fund at the expense of another important goal: paying off long-term financial obligations, such as credit card debt.

A total of 82 percent of respondents to the poll said they currently have non-mortgage debt. According to Securian, this figure has not decreased since its 2007 findings.

On the positive side, the report also shows that people are taking steps to avoid accumulating additional credit card debt, largely by cutting back on purchases made with credit.

"Consumers are clutching cash and postponing debt reduction," commented Kerry Geurkink of Securian Retirement.

"They are wisely adjusting their spending and borrowing, but the ultimate goal of debt-free retirement will be more difficult to achieve without a better balance between saving and debt reduction," she added.

Meanwhile, the government is considering new ways to help consumers navigate the sometimes murky waters of choosing and using financial products.

The Obama administration is reportedly considering creating an agency similar to the Consumer Product Safety Commission that would oversee products such as credit cards and mortgages.

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Consumers are focused on saving more and spending less.