Consumer Payment Card News

U.S. Credit Card Debt Begins to Slide in Tandem with Confidence

Credit Card Debt

U.S. credit card debt began to unravel in August as Americans knocked-off $2 billion in new revolving consumer debt, mostly credit card debt. After adding $15 billion in new credit card debt this year, mostly between April and July. The decline dovetails with the recent sharp declines in U.S. consumer confidence.

U.S. revolving credit, (97% credit card debt), decreased in August, at an annual rate of 2.2%, compared to one-year ago, and follows a revised 10.5% YOY (year-on-year) surge in July and a revised decline of 0.8% in June, according to CardData.

U.S. revolving consumer credit stood at $1078.6 billion at the end of August, compared to a revised $1080.6 billion for July, a revised $1071.2 billion for June, At the end of 2018, Americans owed a revised $1053.5 billion in revolving credit, according to the latest figures released by the Federal Reserve earlier this month.

Credit Card Debt Analysis

On a quarterly basis, U. S. consumer revolving credit increased a revised 5.2% YOY in the second-quarter, compared to a revised 1.5% YOY in the first-quarter, and a revised 3.2% in the second-quarter of last year.

U.S. revolving consumer credit is now growing at 4.12% CAGR (compound annual growth rate) since the second-quarter of 2015, based in analysis by RAM Research.

The spring credit bubble was largely attributed to pent-up consumer demand in the bad first three months of 2019. However, the brief July surge was likely driven by upcoming trade taxes and a pick up in general consumer confidence. But, it quickly disappeared in August as the reality of the trade tariffs kicked-in, as well as more negative economic markers began to pop-up notes Robert McKinley, Senior Analyst for CardTrak.

Non-revolving credit increased at an annual rate of 5.4% in August.

Total consumer credit, at the end of August stood at $4140.5 billion, after crossing the $4 trillion milestone in November.

National Consumer Confidence

For the second month in a row The Conference Board Consumer Confidence Index decreased. The September Index now stands at 125.1, down from 134.2 in August. The Present Situation Index – based on consumers’ assessment of current business and labor market conditions – decreased from 176.0 to 169.0. The Expectations Index – based on consumers’ short-term outlook for income, business and labor market conditions – declined from 106.4 last month to 95.8 for September.

Top 4 U.S. Credit Card Issuers Debt

Second-quarter credit card loan growth, among the Top 4 U.S. issuers, grew a paltry 2.6% year-on-year (YOY), compared to 3.4% YOY in the prior quarter, and compared to 4.8% YOY one-year ago. Among the nation’s Top 4 credit card issuers (Chase [JPM], Capital One [COF], Bank of America [BAC], and Citibank [C]), the annual growth rate for U.S. end-of-period (EOP) credit card outstandings in the second-quarter (2Q/19) is the lowest in the more than five years.

Full Report U.S. Consumer Credit [2015-2019]

Source: Federal Reserve; RAM Research; CardFlash; CardData; CardTrak; Conference Board; Chase; Citibank; Bank of America; Capital One; Bankcenter; CardBuzz; PYRPTS; PYVNTS; Ruebud Media; Red3 Media