Consumers Chip Away at Debt Mountain --- Strong Economy Spurs Rise in Credit-Card Payments
A husband, father and entrepreneur with more responsibilities than he cares to count, Marshall Lane is happy to see his pile of bills getting shorter as he hacks away at credit-card debt.</br></br>In 1996, Mr. Lane and his wife, Jannicke Kolderup-Lane, carried a combined credit-card balance of "about $20,000." Three years later, that balance has been cut in half. "We're at a point where we could pay it off if we wanted to," said the 31-year-old San Francisco art dealer.</br></br>He may not know it, but Mr. Lane -- and others like him -- is beginning to demonstrate a new level of prudence in personal finance that could have broad implications for the U.S. economy.</br></br>For years, economists warned that a high level of consumer debt was the Achilles' heel of an otherwise athletic economy. Overextended consumers, they pointed out, would be forced to use an ever-growing share of household income to pay credit-card bills, leaving little to support consumer spending. And if consumer spending slowed, they bemoaned, so would the economy.</br></br>Yet in recent months, the statistics on the consumer debt front have shown signs of improvement. The pace of new debt has slowed significantly, delinquencies and charge-off rates are falling sharply and the amount of revolving credit outstanding declined in the first quarter. Reducing credit-card debt, say economists, could be the first step to raising the U.S.'s low rates of saving.