Consumer Payment Card News

Financial and Debt Obligations for Consumers Remain Steady as a Rock Throughout 2018

Financial and debt obligations for consumers plateaued in all four quarters of 2018, reflecting rising employment, lower credit card debt, and steady interest rates.

The Financial Obligations Ratio (FOR) and the Consumer Service Ratio (DSR) for U.S. consumer credit remained flat in the final three months of 2018. According to the Federal Reserve, on a seasonally adjusted basis, the FOR was 15.33% in the fourth quarter of 2018, compared to a revised 15.33% in the prior quarter and a revised 15.47% in the year ago quarter. The DSR edged up slightly to 9.88% in the fourth quarter of this year, compared to a revised 9.86% in the prior quarter, and a revised 9.95% in the year ago quarter, according to CardData.

Financial Debt Obligations

U.S. Consumer Debt Ratios

The household DSR is an estimate of the ratio of debt payments to disposable personal income. Debt payments consist of the estimated required payments on outstanding mortgage and consumer debt.
The Financial Obligations Ratio is a broader measure than the Debt Service Ratio. It includes rent payments on tenant-occupied property, auto lease payments, homeowners’ insurance, and property tax payments.

The FOR peaked at 18.13% in the fourth quarter of 2007. Since peaking at 13.18% in the fourth quarter of 2007, the beginning of the Great Recession, the DSR has declined steadily since, dipping into single digits for the first time in the fourth quarter of 2012 (9.87%) according to RAM Research.

U.S. Consumer Revolving Credit


Revolving consumer debt, mostly credit card debt (97%), remained above the $1 trillion level for the seventh consecutive quarter. However, the year-over-year change in U.S. consumer debt growth, is powering down with the start of first quarter, extending the weakening trend experienced throughout 2018.

According to figures released by the Federal Reserve, revolving consumer credit outstandings (mostly credit card) stood at $1058.0 billion for January, compared to a revised $1055.5 billion for end-of-year (EOY) 2018, compared to $1024.0 billion for EOY 2017, and a revised $969.4 billion for EOY 2016.

Big 6 Credit Card Issuers

U.S. credit card outstandings end-of-period (EOP) among the Big 6 credit card issuers increased 2.7% in the fourth quarter (4Q/18) year-on-year (YOY), compared to a 6.8% YOY for the year ago quarter. Over the past two years, Big 6 outstandings have jumped 9.7%.

The Big 6: Chase (JPM), Capital One (COF), Bank of America (BAC), and Citibank (C), Discover (DFS), American Express (AXP) reported $589.0 billion in 4Q/18 U.S. credit card outstandings, compared to $570.1 billion for 3Q/18 and $573.4 billion for 4Q/17, based on figures collected by CardData.

U.S. Consumer Financial Obligations Ratio

(seasonally adjusted)

1Q/2017: 15.53%
2Q/2017: 15.53%
3Q/2017: 15.51%
4Q/2017: 15.47%
1Q/2018: 15.33%
2Q/2018: 15.33%
3Q/2018: 15.33%
4Q/2018: 15.33%

Additional Current & Historical Monthly U.S. Consumer Financial Obligations Ratio

U.S. Consumer Debt Service Ratio

(seasonally adjusted)

1Q/2017: 9.98%
2Q/2017: 9.98%
3Q/2017: 9.98%
4Q/2017: 9.95%
1Q/2018: 9.86%
2Q/2018: 9.85%
3Q/2018: 9.86%
4Q/2018: 9.88%

Additional Current & Historical Monthly U.S. Consumer Debt Service Ratio

U.S. Revolving Consumer Credit

2012: $845.2 billion
2013: $855.6 billion
2014: $889.1 billion
2015: $907.9 billion
2016: $969.4 billion
2017: $1024.0 billion
2018: $1055.5 billion

Additional Current & Historical Monthly U.S. Revolving Consumer Credit

Source: Federal Reserve; RAM Research; CardFlash; CardData;

NOTE: FOR/DSR Figures Revised & Updated as of 03/18/19; All Revolving Credit Revised & Updated as of 03/07/19