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US Card Debt Hits New Record Near $1 Trillion
Americans were the proud owners of a record 564 million credit card accounts at the end of last year, according to the latest household debt report from the New York Fed, released on Thursday.
That was nine million more than the previous quarter, and up 6% from Q4 of 2021.
For reference, Americans had just 378 million accounts in Q3 of 2010, when the post-financial crisis de-leveraging troughed. Taken at face value, even that figure represented more than one credit card account for every man,
The well seems to be running dry.
Until folks get nervous about their employment, I would not expect to see credit outstanding on cards to decline. Inflation alone would drive up nominal balances. And some are probably living off their credit lines.
I’d like to know how much of that nearly 1 trillion gets paid in full by credit card holders every month. These are people who have the money, but are using their CC as opposed to cash/debit cards because of points, miles, reporting, etc.
That’s the big question. I always pay my credit card in full on the payment day due. I even have one card with a 10K balance at 0% interest, no fees, good for 12 months. That is arbitrage money currently in T-Bills.
Plus whatever Americans have in home equity line balances, also variable rate although still single-digit.
Is there any data on how much of the credit card balance is paid off each month, rather than rolled over as interest-incurring debt?
On the positive side, high rates should suppress the BNPL model.
“So even as credit card balances outstanding have returned to pre-pandemic levels, as a reflection of spending, the number of accounts that carry interest-bearing balances has fallen by 10%, according to American Bankers Association data.”
https://wolfstreet.com/2023/02/16/where-households-ended-up-with-their-credit-in-q4-credit-card-balances-credit-limits-available-credit-delinquencies-collections/
Thank you for the link. Some interesting data in there.
The last data I saw was that many more folks pay in full every month than issuers would like. So, I just looked and data I found said 42% of CC users pay CC balances off every month. BTW Wisdom Tree has much data on CC behavior. Other data I saw said debit/cash card usage exceeds CC debt. Personally, although I have several debit cards, none has ever been used. My first CC was a BankAmericard (now Visa) sent to me unsolicited in the 1960s. I have only carried a CC balance three times for a month and none for over 40 years. I actually had two credit cards taken away from me for low usage and paying the balance when due (Gen Motors and Sears). I use my cards for everything except monthly bills and why not as it shifts paying bills for a month.