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Strong holiday spending could prompt new credit card offers

By , CardRatings contributor
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Americans took on more credit card debt during the 2011 holiday season without going overboard, according to statistics from Experian and the Federal Reserve. Government officials announced figures from November that show a $20 billion spike in consumer spending, the biggest holiday rebound in over a decade.

Though auto sales played a major part in the holiday spending surge, researchers say a combination of favorable weather and deep discounts encouraged many Americans to float at least some of their purchases on credit cards. Retail credit cards and zero percent APR credit cards helped inspire a 4 percent boost in consumer goods sales.

The Federal Reserve's announcement echoes results from a new consumer study commissioned by credit reporting bureau Equifax. Americans' overall credit card balances still represent a sharp drop from their all-time highs in the fall of 2008, according to Equifax's latest National Credit Trends Report. Consumers carried $604 billion in credit card balances into the new year, down from $752 billion before the start of the 2008 holiday season.

Banks ready to raise limits, unleash balance transfer offers

In a statement to reporters, Equifax spokesman Michael Koukounas explained that trends like these often signal an impending increase in the amount of available credit for consumers. With write-offs low and balances stable, many banks use balance transfer offers and low introductory rate deals to lure less risky customers away from their competitors. Similar cycles saw banks ramp up credit card rewards programs while raising credit limits, encouraging consumers to carry higher balances.

Like other industry analysts, Koukounas suggested that a three-year credit crunch had taught Americans how to manage credit cards more wisely. Koukounas cited "sustained improvement in consumers' payment behavior and overall reduction of debt," adding that lenders had also learned to issue accounts more responsibly in the wake of the recession.

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