Consumer Payment Card News

December Credit Card U.S. Debt Off the Scale

December Credit Card

December credit card debt went off the rails driven by a very late Black Friday and a pull-back on consumer tariff taxes. As a result. the year-over-year expansion in credit card debt skyrocketed in December by a record 14%, compared to a 3% decrease in November, and a strong 8% gain in October. The $10 billion one-month gain is the largest for 2019, surpassing the $14 billion gain over a two-month period in the summer.

U.S. revolving consumer credit stood at $1098.0 billion at the end of December, compared to a revised $1085.3 billion for November, and a revised $1088.3 billion for October. 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.

U.S. revolving credit, (97% credit card debt), increased in December at an annual rate of 14.0%, compared to one-year ago, and follows a revised 3.2% YOY (year-on-year) decline in November, and a revised 8.3% for October, according to CardData and PYRPTS.

For 2019, the data show Americans added $44.5 billion in revolving consumer credit, well above the $30 billion annual gains in the past three years, but well below the $100+ billion party in 2016. Over the past five years U.S. consumer revolving credit, on an annual basis, increased 4.2% for 2019; 3.1% for 2018; 5.6% for 2017; 6.8% for 2016: and 5.4% for 2015, according to RAM Research and CardWeb.

Senior Analyst Robert McKinley says the erratic nature of U.S. credit behavior in 2019 remains a concern with lenders, mirroring the pattern of the year before the “Great Recession.”

Quarterly Credit Debt Analysis

On a quarterly basis, U. S. consumer revolving credit increased 6.3% YOY in the fourth-quarter, compared to a revised 3.6% YOY in the third-quarter, a revised 5.2% in the second-quarter, and 1.5% in the first-quarter of 2019. In the year ago quarter the YOY gain was 5.0%, according to Bankcenter and CardBuzz.

U.S. revolving consumer credit is now growing at a revised 4.92% CAGR (compound annual growth rate) since the fourth-quarter of 2015, based in analysis by CardFlash and CardTrak.

Non-revolving credit increased at an annual rate of 3.7% in December and a revised 4.6% for the fourth-quarter, according to the Federal Reserve.

Total consumer credit, at the end of December stood at $4197.1 billion, after crossing the $4 trillion milestone in November 2018.

Professor Cardworthy notes there are plenty of potential land mines ahead including a reignited trade war, the coronavirus global impact, Mid-East war, and very nasty election cycle.

Top 4 Credit Card Outstandings

Credit card balances for the fourth-quarter, among the Top 4 U.S. issuers, grew a solid 6.0% year-on-year (YOY), compared to 4.3% YOY in the prior quarter, and compared to 2.8% 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 fourth-quarter (4Q/19) is the second highest in the past five years.

For the fourth-quarter U.S. credit card EOP outstandings, among the Top 4 posted at $481.4 billion, compared to $450.8 billion for 3Q/19, and $454.1 billion for 4Q/18. For the fourth-quarter of 2015, the Top 4 reported $376.2 billion in U.S. EOP credit card outstandings, according to figures collected by CardData and PYRPTS.

The YOY gain in U.S. EOP outstandings for the fourth-quarter of 6.0%, compares to a YOY increase of 2.8% in 4Q/18, 5.8% in 4Q/17, and 10.9% in 4Q/16. U.S. EOP outstandings for the Top 4 U.S. issuers is now growing at a 6.36% compound annual growth rate (CAGR), compared to 5.61% in the prior quarter, according to RAM Research.

January Consumer Confidence

According to the Conference Board Consumer Confidence Index, consumer confidence increased for the second consecutive month in January. Those claiming business conditions are “good” increased from 39.0% to 40.8%, while those claiming business conditions are “bad” decreased, from 11.0% to 10.4%.

The Surveys of Consumers, by the University of Michigan, found consumer sentiment remained virtually unchanged in early January, differing by just 0.2 Index-points from December. This stability extended to all components, both current assessments as well as future economic prospects.

2020 Outlook

Robert McKinley says there is a building consensus the economy will likely go to “hell in a handbasket” after the fall elections.

Sources: Federal Reserve; CardData; RAM Research; CardTrak; CardFlash; Cardworthy; CardWeb; PYRPTS; CardBuzz; Bankcenter; PYVNTS; Ruebud Media; Red3 Media; Robear’s List