Will That Be Cash or Cash?

Americans save more, pay upfront as times get tougher
By Jim O'Neill,  Newser User
Posted Feb 5, 2008 9:20 AM CST
As the economy worsens, more Americans are paying with cash instead of credit cards.   (Getty Images)
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(Newser) – The collapsing housing market, shaky employment security, and uncertain economic outlook are changing Americans' buying habits: They’re paying with cash. Plastic has become synonymous with debt, helping revive the pay-as-you-go mentality, reports the New York Times. The change could have a major impact on an economy, and a culture, based on consumer credit.

A generation ago, Americans put away upward of 10% of their income; today, the savings rate is below zero. Some 33% of Americans borrowed against home equity to fund daily expenditures, spending so much that their savings reflected a negative 13% rate by 2006. It’s improved somewhat, but, says one economist, “For them, that game is over.”