No more credit? Not so fast.

A recent story in the New York Times suggests that the numbers showing cut-backs in credit might have more to do with bank write-offs than cautious consumers. Click here to read the story.

Implications: I’ve been as vocal as anyone about consumers’ apparent aversion to credit. But we should all stay tuned to the facts. If bank write-downs make the numbers look a little more extreme than they really are, then we should make note of that possibility.

That said, I still think the “live now, pay later” mindset—where consumers thought nothing of racking-up frivolous charges on their credit cards—are over. I think most folks realize (more than ever) that credit is to be used with caution; more as a tool to help manage household cash flow than to buy things one cannot reasonably afford.

(Another factor in reduced credit balances is the tighter credit market, which might make new borrowing a little less attractive or convenient for some consumers.)

Mike Anderson