Consumer revolving debt, mostly credit card debt (95%), remained above the $1 trillion level for the sixth consecutive quarter. However, the year-over-year change in U.S. credit card debt, slowed dramatically in the last three months of 2018, from a revised 11.6% in October, to a revised 5.6% in November and 2.0% in December.
The strong economy with low unemployment is reducing the need for consumer credit, but bankers see a reversal in their crystal ball. Overall the Consumer Debt Service Ratio & Debt Financial Obligations Ratio has been declining slightly, according to analysis by RAM Research.
According to the Federal Reserve, revolving consumer credit outstandings (mostly credit card) stood at $1044.6 billion for end-of-year (EOY) 2018, compared to $1024.9 billion for EOY 2017, and a revised $969.4 billion for EOY 2016. At the end of the fourth quarter of 2018, revolving consumer credit stood at $1044.6 billion.
New U.S. Record
On a quarterly basis U.S. revolving consumer credit is growing by 6.4% YOY to a revised $1044.6 billion for 4Q/18, compared to a revised 2.2% YOY or $1028.0 billion for 3Q/18, and 8.2% YOY $1024.0 billion for 4Q/17.
Non-revolving credit increased at an annual rate of 6.0% in December, according to CardData.
Total consumer credit, at the end of December, stood at $4010.0 billion, the first time crossing the $4 trillion milestone.
U.S. Debt Load
Financial Obligations Ratio (FOR) and the Consumer Service Ratio (DSR) for U.S. consumer credit continues to edge downward. According to the Federal Reserve, on a seasonally adjusted basis, the FOR slightly decreased to 15.29% in the third quarter of 2018, compared to 15.32% in the prior quarter and 15.46% in the year ago quarter. The DSR slipped down to 9.82% in the third quarter of this year, compared to 9.84% in the prior quarter, and 9.94% in the year ago quarter.
U.S. Consumer Revolving Credit
4Q/15: $938.8 billion
4Q/16: $969.4 billion
4Q/17: $1024.0 billion
4Q/18: $1044.6 billion
Source: Federal Reserve; RAM Research; CardData
New and Revised Data as of 2/07/19