Consumer Payment Card News

April Revolving Credit Explodes After Wackiest Quarter Ever

April Consumer Credit

April revolving credit, mostly credit card debt, made a sharp rebound, surging 7.9% over April 2018, following a revised 2.3% year-on-year decline in March. The surprise bump is likely due to pent-up credit demand created in the first three months of 2019 with the likes of widespread bad weather, the “Trump Shutdown,” trade tax (tariffs) war/threats, and uncertainty with the overall direction of the economy along with interest rates.

Historically, the second quarter of the year (April-June) is stronger than the first quarter as the impact of the holiday shopping season wanes. However, this year U.S. consumer credit has been nothing short of wacky and still points to overall weak growth.

U.S. Consumer Credit

The year-on-year (YOY) growth rate of consumer revolving debt (97% credit card debt) for April posted at +7.9%, compared to a revised -2.3% YOY for March, and a revised +3.6% YOY for February, according to figures released by the Federal Reserve Friday afternoon.

On a quarterly basis revolving consumer credit grew at an annual revised rate of 1.5% in the first quarter of 2019, compared to a revised annual rate of 0.7% in the first quarter of 2018, according to CardData.

Looking at U.S. revolving consumer credit, on an annual basis, the revised growth rate for 2018 was 3.1%, compared to 5.6% for 2017; 6.8% in 2016; 5.4% for 2015; and 3.9% for 2014. RAM Research projects the annual growth rate for 2019 will end on par with 2018, or around 1.5% YOY.

Total revolving consumer credit outstandings stood at $1064.5 billion for April, compared to a revised $1057.5 billion for March, and a revised $1059.5 billion for February.

Non-revolving credit increased at an annual rate of 4.2% in April.

Total consumer credit, at the end of April, stood at $4069.8 billion, after crossing the $4 trillion milestone in November.

U.S. Outlook

The wild ride in consumer credit growth thus far may be further skewed in the months ahead notes CardTrak, CardData, CardFlash Senior Analyst Robert McKinley. With major retailers to pass the China trade tariffs onto consumers beginning in September, Americans may scramble to make major appliance purchases or to stock up on consumables. Further, making projections difficult are the signs of an impending economic slowdown including the lower-than-expected jobs stats released last week.

U.K. Consumer Credit

Meanwhile, across the pond, U.K. credit card debt ticked down to its lowest annual growth rate since June 2014. Overall the annual growth rate of consumer credit slowed to 5.9% in April, five percentage points below its peak in November 2016. However, consumer credit increased by £0.9 billion in April, in line with the monthly average increase since July 2018.

According to figures from the Bank of England (BOE), U.K. consumer credit card lending settled at £72.7 billion for a 5.7% YOY (year-on-year) gain in April, compared to a revised £72.7 billion or a 6.6% YOY gain in March, and compared to a revised £72.7 billion for a 6.3% YOY increase for February 2019. One-year ago U.K. consumer credit card lending settled at £71.2 billion, according to figures collected by CardData.

AU Consumer Credit

On the other side of the world, Australian March credit cards continue to getting beaten down as spending and debt fall. Outstandings decreased 2.1% year-on-year (YOY) and gross dollar volume increased only 3.8% YOY, according to figures gathered by CardData.

Australian credit cards have been in hiding in the outback to its lowest level in more than five-years, while the number of credit card accounts diminished by 470,000 since March 2018. Credit card spending was also sluggish increasing by a mere 1.8% YOY in March, according to Senior Analyst Robert McKinley, on behalf of CardTrak and CardFlash.

According to Australian credit card balance and usage data released this week by the Reserve Bank of Australia. Australians owed AU$51.5 billion in March, compared to AU$51.9 billion for February and AU$52.6 billion for March 2018.

U.S. Consumer Revolving Credit Card Debt

1Q/15: $895.9 billion
1Q/16: $953.2 billion
1Q/17: $980.4 billion
1Q/18: $1023.9 billion
01/19: $1057.5 billion
02/19: $1064.5 billion (April)

U.S. Consumer Revolving Credit Card Debt

YOY Change

1Q/15: 2.0%
1Q/16: 6.1%
1Q/17: 4.5%
1Q/18: 0.7%
1Q/19: 1.5%
2Q/19: 7.9% (April)

Additional Current & Historical Monthly Data on U.S. Consumer Credit

Source: Federal Reserve; Bureau of Labor Statistics; RAM Research; CardFlash; CardData; CardTrak; Bank of England; Reserve Bank of Australia

New and Revised Data as of 06/07/19