Plastic loses its shopping cool for U.S. consumers

By Juan Lagorio - Analysis

NEW YORK (Reuters) - Americans are discovering that it is no longer OK to just put it all on plastic.

Not only are banks curbing their issuance of new credit cards and the credit available on existing ones, but anecdotal evidence suggests that this holiday season, shoppers are much more wary of piling on debt than they have been for some time.

Facing the worst recession in decades, a mixture of rising unemployment and worsening housing slump, consumers are resisting the urge to pull out credit cards to pay for items they may not be able to afford.

Meredith Whitney, a prominent banking analyst at Oppenheimer & Co, warned on Monday that reluctance to go further into debt could be just the tip of the iceberg as she forecast a 45 percent pullback in credit card liquidity.

That probably means more bad news for retailers and is a double-edged sword for the banks that issue credit cards and want to avoid the pain of defaults but also lose income if cards aren't used.

"I just came out of debt. I am very, very respectful when it comes to credit," said Rose Fernandez, a law enforcement worker who had had up to $6,000 in debt until recently.

She added, while looking for bargains on Saturday at Jersey City's Newport Center mall, that her family was only living according to their means and not spending anything extra.

Janice Peters, a social worker with between $4,000 and $6,000 in credit card debt, said she was shopping carefully on Friday at Macy's: "There really isn't that much money. Based on the news, it's just going to get worse.

"I'm trying not to spend and trying not to use credit cards. The balance is worrying."

Figures about credit card use from the big shopping day after Thanksgiving, Black Friday, were not yet available.

Spendingpulse, the retail data service of MasterCard Advisors, a unit of MasterCard Inc (MA.N), and Visa Inc (V.N) said they could not provide details about the use of credit cards during the weekend.

But analysts say the trend is clear:

"We've definitely already started to see a drop off in overall spending on credit cards. People are spending what they have, using their debit cards instead of borrowing from the banks using their credit cards," said John Williams, an analyst at Macquarie Research.

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For years, Americans have enjoyed the access to easy plastic money as financial companies flooded their mailboxes with credit cards ready to be used.