According to an analysis by the Federal Reserve, 2009's drop in credit card debt was largely the result of banks writing off loans that borrowers were no longer able to pay.
Banks wrote off a record $83.27 billion in credit card debt last year. While a drop in credit card debt is typically good news, in this particular instance it wasn't.
"If you just look at the numbers, you think, 'Oh my goodness, there was a big decrease in credit card debt,'"Odysseas Papadimitriou, CEO and founder of CardHub.com says. Papadimitriou also says that the majority of Americans couldn't possibly make a dent in outstanding debt with the economic upheavals of 2009.
Credit card borrowing fell for 16 straight months through January, suggesting consumers have been chipping away at balances and spending less. The CardHub study found that the only time consumers truly paid down their debt was in the first quarter of last year. The charge-off rate on credit card loans spiked dramatically in the downturn, hitting a record 10.1 percent in the third quarter of 2009.
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