Payment Card News

Debt Drop

828 0

American consumers lopped-off more than $3 billion of revolving debt during May according to figures released Wednesday afternoon by the Federal Reserve. For May, revolving credit contracted at an annual rate of 7.4%, a significant shift from last May’s 4.6% annual rate of growth. May is typically a weak period for credit cards, coming just ahead of the summer vacation period, but the Fed’s seasonally-adjusted data suggests cardholders may be slowing down this summer. However, auto lending and loans for mobile homes, boats, trailers, vacations and education remain strong this year, offsetting the contraction in revolving debt somewhat. More than 80% of revolving credit is bank credit card debt. Overall consumer credit grew a mere 30 basis points this May compared to 330 basis points last May. At the end of May, American consumers were $1.252 trillion in debt, exclusive of home mortgages.

                    REVOLVING CREDIT HISTORICAL
                  May98    Apr98   Mar98    Feb98    Jan98
%GRWTH:     -7.4%     3.8     0.5      7.8      4.1
$OWED:     $534.7    538.0   536.3    536.1    532.6

                  Dec97    Nov97    Oct97    Sep97    Aug97
%GRWTH:       2.3     -2.1     10.0      6.2      8.0
$OWED:      530.8    529.8    530.7    526.4    523.7
    Source: Federal Reserve; revised figures as of 07/08/98
FULL STORY:
                                                            CONSUMER CREDIT
                                                               May 1998                                                    July 8, 1998

Consumer credit outstanding was about unchanged in May, following a 5-1/2 percent rate of increase in April.  In May, growth in auto
and "other" credit was offset by a decline in revolving credit.

CONSUMER CREDIT OUTSTANDING 1
Seasonally adjusted
---------------------------------------------------------------------------------------------------------------------------------------
                                                             1997                                                1998
                                _______________________________________________________________ _______________________________________

                                  May    June    July    Aug.    Sept.   Oct.    Nov.    Dec.   Jan. r  Feb. r  Mar. r  Apr. r   May p
---------------------------------------------------------------------------------------------------------------------------------------
Percent change at annual rate 2
  Total                             3.3     2.2     4.7     5.8     1.4     9.0    -5.9     3.7     5.2     7.4     2.3     5.4     0.3
   Automobile                       2.7     7.1    11.1    -1.3     6.3    11.4    -6.2    19.4     5.5     3.2     8.1     3.2     3.0
   Revolving                        4.6     4.2     9.4     8.0     6.2    10.0    -2.1     2.3     4.1     7.8     0.5     3.8    -7.4
   Other 3                          1.9    -7.9   -12.1    11.6   -13.6     4.1   -12.4   -15.8     6.9    12.7    -2.5    11.5    10.7

Amount: billions of dollars
  Total                         1,209.5 1,211.7 1,216.5 1,222.4 1,223.8 1,233.0 1,226.9 1,230.7 1,236.1 1,243.7 1,246.1 1,251.7 1,252.1
   Automobile                     397.5   399.8   403.5   403.1   405.2   409.0   406.9   413.5   415.3   416.5   419.3   420.4   421.4
   Revolving                      514.3   516.2   520.2   523.7   526.4   530.7   529.8   530.8   532.6   536.1   536.3   538.0   534.7
   Other 3                        297.7   295.8   292.8   295.6   292.3   293.3   290.3   286.4   288.1   291.1   290.5   293.3   295.9
---------------------------------------------------------------------------------------------------------------------------------------

TERMS OF CREDIT AT COMMERCIAL BANKS AND FINANCE COMPANIES 4
Percent except as noted: not seasonally adjusted
---------------------------------------------------------------------------------------------------------------------------------------
Institution, terms, and type of loan
---------------------------------------------------------------------------------------------------------------------------------------
Commercial banks
  Interest rates
   48-mo. new car                  9.20    n.a.    n.a.    8.99    n.a.    n.a.    8.96    n.a.    n.a.    8.87    n.a.    n.a.    8.69
   24-mo. personal                13.81    n.a.    n.a.   13.84    n.a.    n.a.   14.50    n.a.    n.a.   14.01    n.a.    n.a.   13.76
   Credit card plan
    All accounts                  15.75    n.a.    n.a.   15.78    n.a.    n.a.   15.65    n.a.    n.a.   15.65    n.a.    n.a.   15.67
    Accounts assessed interest    15.72    n.a.    n.a.   15.81    n.a.    n.a.   15.62    n.a.    n.a.   15.33    n.a.    n.a.   15.62

New car loans at auto finance companies
  Interest rates                   7.80    7.64    6.71    5.93    6.12    7.27    6.85    5.93    6.12    6.98    5.94    6.20    6.07
  Maturity (months)                53.2    53.3    54.6    55.5    55.4    54.4    53.7    53.5    52.8    52.6    51.5    50.7    50.8
  Loan-to-value ratio                93      93      94      93      93      92      91      92      92      92      92      91      93
  Amount financed (dollars)      18,060  18,171  18,281  18,329  18,520  18,779  18,923  19,121  18,944  18,825  18,932  18,922  18,793
---------------------------------------------------------------------------------------------------------------------------------------
This release is issued around the fifth business day of each month. The exact date and time may be obtained by calling (202) 452 - 3206.
Footnotes appear on reverse.

1
CONSUMER CREDIT OUTSTANDING
(Billions of dollars)
Not seasonally adjusted

---------------------------------------------------------------------------------------------------------------------------------------
                                                             1997                                                1998
                                _______________________________________________________________ _______________________________________

                                  May    June    July    Aug.    Sept.   Oct.    Nov.    Dec.   Jan. r  Feb. r  Mar. r  Apr. r   May p
---------------------------------------------------------------------------------------------------------------------------------------

Total                           1,199.3 1,205.0 1,209.6 1,220.7 1,226.7 1,232.5 1,234.5 1,264.1 1,246.1 1,238.5 1,234.7 1,240.5 1,241.4

Major holders
Commercial banks                  511.6   510.7   514.5   516.2   507.5   506.3   506.5   512.6   502.0   497.8   492.2   502.2   499.5
Finance companies                 154.9   156.7   156.4   157.2   158.4   156.9   156.4   160.0   159.5   155.7   156.1   154.0   153.2
Credit unions                     146.7   147.6   148.8   149.3   150.0   150.6   150.6   152.4   151.0   149.8   149.3   149.1   149.8
Savings institutions               46.3    46.5    47.2    47.8    48.5    48.0    47.6    47.2    47.1    47.1    47.1    47.1    47.0
Nonfinancial business              67.7    68.0    67.6    68.6    68.7    68.5    70.5    78.9    75.3    72.8    72.7    65.0    65.1
Pools of securitized assets 5     272.1   275.6   275.2   281.6   293.5   302.2   302.9   313.1   311.1   315.3   317.2   323.1   326.8

Major types of credit 6
Automobile                        393.8   399.6   404.0   405.7   408.8   413.5   411.1   417.0   413.6   412.2   415.2   415.4   417.4
 Commercial banks                 155.2   156.0   157.8   158.5   157.2   157.9   156.2   155.3   154.4   152.7   153.6   150.6   150.8
 Finance companies                 85.1    87.0    88.3    88.4    88.5    86.8    86.0    87.0    87.4    84.7    86.8    90.6    89.6
 Pools of securitized assets 5     50.8    53.0    53.3    53.0    56.0    60.6    60.4    65.0    63.1    66.0    65.1    63.6    65.7

Revolving                         509.6   511.4   515.1   520.8   524.3   527.5   532.9   555.9   541.1   535.5   530.4   531.1   529.9
 Commercial banks                 212.8   213.3   219.0   217.5   209.3   209.5   212.7   219.8   208.8   204.6   197.3   204.9   202.3
 Finance companies                 35.2    34.9    33.5    33.5    34.9    34.7    34.8    38.6    37.6    36.9    36.3    30.1    30.2
 Nonfinancial business             37.1    37.3    36.8    37.6    37.7    37.5    38.9    45.0    42.7    41.0    41.2    33.5    33.4
 Pools of securitized assets 5    195.8   196.8   196.5   202.4   212.4   215.7   216.4   221.5   221.8   223.4   226.6   233.9   235.6

Other                             295.9   294.0   290.6   294.3   293.6   291.5   290.5   291.3   291.4   290.9   289.1   293.9   294.1
 Commercial banks                 143.6   141.4   137.7   140.2   141.0   138.9   137.5   137.5   138.8   140.5   141.3   146.6   146.4
 Finance companies                 34.7    34.8    34.7    35.2    35.0    35.3    35.5    34.4    34.5    34.1    33.0    33.4    33.5
 Nonfinancial business             30.7    30.7    30.8    31.1    31.0    31.1    31.6    34.0    32.7    31.8    31.4    31.5    31.7
 Pools of securitized assets 5     25.5    25.8    25.4    26.1    25.1    25.8    26.1    26.6    26.3    26.0    25.6    25.7    25.5
---------------------------------------------------------------------------------------------------------------------------------------

1. Covers most short- and intermediate-term credit extended to individuals, excluding loans secured by real estate.
2. Percent changes calculated from unrounded data.
3. Comprises mobile home loans and all other loans not included in automobile or revolving credit, such as loans for education, boats,
trailers, or vacations. These loans may be secured or unsecured.
4. Interest rates are annual percentage rates (APR) as specified by the Federal Reserve’s Regulation Z. Interest rates for new-car loans
and personal loans at commercial banks are simple unweighted averages of each bank’s most common rate charged during the first calendar
week of the middle month of each quarter. For credit card accounts, the rate for all accounts is the stated APR averaged across all
credit card accounts at all reporting banks. The rate for accounts assessed interest is the annualized ratio of total finance charges at
all reporting banks to the total average daily balances against which the finance charges were assessed (excludes accounts for which no
finance charges were assessed). Finance company data are from the subsidiaries of the three major U.S. automobile manufacturers and are
volume-weighted averages covering all loans of each type purchased during the month.
5. Outstanding balances of pools upon which securities have been issued; these balances are no longer carried on the balance sheets of
the loan originators.
6. Includes estimates for holders that do not separately report consumer credit holding by type.
r=revised. p=preliminary.

Leave A Reply