Consumer Credit Card Debt Falls for 27th Consecutive Month U.S. consumers cut their credit card spending again in November, marking the 27th straight month of declines, according to the latest data released by the Federal Reserve.

The report showed that the average Consumer Credit Card Debt Falls for 27th Consecutive Month:

Outstanding revolving loans, made up mostly of credit card balances, fell $4.2 billion in November from October, down 6.3 percent at an annual rate. That was after a $5.6 billion drop in the previous month.

Consumer credit card debt falls for 27th consecutive month Overall, since its peak in August 2008, just before the financial crisis, U.S. revolving credit has fallen by $177.1 billion, from $973.6 billion to $796.5 billion USD, which is a decrease of 18.2 percent. During that period, the average American family with outstanding credit card debt — 54 million by the Fed’s count — reduced their debt by $3,280, according to the report.

However, non-revolving credit grew for the fourth month in a row. This category includes auto loans, student loans, and loans for mobile homes, boats, and trailers. The increase in November was an unadjusted $5.5 billion compared to the previous month.

The largest increase in the non-revolving debt category was in government spending on education, which rose by an unadjusted $3.6 billion Consumer Credit Card Debt Falls for 27th Consecutive Month.

Credit card debt falls for fourth straight month:

Auto sales also rose to a seasonally adjusted 12.26 million annualized in November before rising again to 12.53 million annually in December. The fourth quarter of 2010 saw a total of 37.04 million annually, the strongest result since the beginning of the crisis Consumer Credit Card Debt Falls for 27th Consecutive Month.

amount financed for a new car in November fell to $27,433, which represented 82 percent of the total price of the car, on an unadjusted basis. But the interest rate rose slightly to 4.63 percent from 4.52 percent in November Consumer Credit Card Debt Falls for 27th Consecutive Month.

Overall, consumer loans outstanding rose $1.4 billion, or 0.7 percent, to $2.403 trillion in November after rising a revised $7 billion in October. It was his fourth month in a row Consumer Credit Card Debt Falls for 27th Consecutive Month.

Data from the quarterly regulatory filings of major US credit card issuers showed that delinquency rates continued their downward trend. Early-stage defaults — payments 30 days or more late — fell to 4.38 percent in November, the lowest level in nearly three years, according to a Moody’s Investors Service report.

All of the largest US credit card issuers, including JPMorgan Chase, Bank of America, Capital One and Citigroup, reported lower delinquencies for November. Charge-offs — lenders no longer expecting to be repaid and writing off their books as losses — rose at JPMorgan and Capital One and fell at the other big four issuers.

Interestingly, even though consumers have been steadily reducing credit card balances for nearly two and a half years now, overall spending jumped 5.5 percent this past holiday season, the largest increase since 2005.

Increased holiday spending can be interpreted as an indicator of improving consumer confidence, which may be further supported by a Labor Department report that showed the U.S. unemployment rate fell to 9.4 percent in December as the economy added 103,000 jobs Consumer Credit Card Debt Falls for 27th Consecutive Month.

However, the unemployment rate is still too high by historical standards and many consumers have limited access to credit, meaning credit card balances are likely to continue to decline in the coming months, even as overall spending is likely to continue its upward trend Consumer Credit Card Debt Falls for 27th Consecutive Month.

U.S. credit card balances fell for a fourth straight month in September, suggesting growing caution among the nation’s consumers. Revolving credit fell a seasonally adjusted $2.06 billion in September, or 2.91% annually. Non-revolving debt, mostly auto and education loans, increased by $15.80 billion, or an 8.7% annual rate. [Wall Street Journal]

The CARD Act saved consumers $20 billion a year, the study found:

A recent study by the Social Science Research Network shows that the CARD Act could have saved credit card holders more than $20 billion annually since its implementation. The study found that regulatory limits on credit card fees reduced total borrowing costs by 2.8% per year on average daily balances. There was no evidence of increases in interest charges or restrictions on access to credit, which many banks say they should use to offset the regulations. [LowCards.com]

Nilson reports 20-year first: Credit highest debit Consumer Credit Card Debt Falls for 27th Consecutive Month.

The Nilson Report says that debit cards lost purchase and transaction volume to credit cards in 2012. This seemingly small shift would reverse a 20-year trend in which debit cards took away credit card purchase and transaction volume, along with checks and cash. Nilson said credit cards accounted for 52.82% of spending in 2012 compared to 47.18% for debit cards, while in 2011 credit cards accounted for 52.63% and debit cards for 47.37%. The firm has suggested that by 2017, 54.72% of transaction volume will go to credit cards and 45.28% to debit cards. [Credit Union Times]

PROMOTED

The credit card application rules are easy

On November 4, the Consumer Financial Protection Bureau lifted the restriction that prevented stay-at-home partners without individual income from applying for a loan. [Wall Street Journal]

Cash-only business owners risk a $100 billion mistake Consumer Credit Card Debt Falls for 27th Consecutive Month.

If cash has additional costs for consumers that run into the hundreds of billions annually — as one recent study found — the jury is still out on the lost sales opportunity among cash-only merchants. According to a report by Javelin Strategy & Research, in 2011, 27% of all personal point-of-sale purchases were made in cash, while payments with plastic cards – debit and credit – accounted for 66%. According to Intuit, 55% of the nation’s 27 million small businesses don’t accept credit cards. By not accepting cards, these 15 million businesses are missing out on $100 billion a year in revenue — roughly $7,000 per company a year. [CNBC]

How South Korea Became a Credit Card Nation>

In two decades, South Korea has rapidly transformed from a country of savers to a nation of spenders and borrowers Consumer Credit Card Debt Falls for 27th Consecutive Month. The country now owns the most credit cards per capita in the world, according to Bank of Korea statistics, with five times more credit cards than people. In 1990, Koreans saved an average of 22.2% of their net household income. By 2012, that number had dropped to 3.4%. And the ratio of household debt to disposable income in 2012 was 160 – higher than in the US in 2007 before the housing bubble burst. [Bloomberg Businessweek]

British Airways Card brings back 100,000 bonus miles>

The British Airways Visa Signature Card has brought back its 100,000 mile rewards program and these can be converted to AAdvantage points that can be used with American Airlines. Several steep levels of spending are required to earn the 100,000 mile bonus: 50,000 miles after spending $2,000 on the card in the cardholder’s first three months, 25,000 after spending $10,000 on the card in the first year, 25,000 after spending another $10,000 $ on the card in the first year Consumer Credit Card Debt Falls for 27th Consecutive Month. There is also a $95 annual fee for the card. [LowCards.com]

How not to suck at understanding credit card rewards:

Credit card rewards programs are often confusing and sometimes limited by rules that can render them worthless or make points disappear into thin air. I checked my own rewards and after about an hour I had earned enough points to have over $1,800 in credit on my credit card statements and arranged for another $75 in gift cards to be delivered to my home Consumer Credit Card Debt Falls for 27th Consecutive Month.

I also got a 5x points bonus on one of my cards on new purchases between today and the end of the year. Why did I suck? I also learned that I had let enough points expire which could have meant an additional $1,500 in cash or account credits. [consumer]

LowCards.com’s Weekly Credit Card Rate Report

Based on more than 1,000 cards in the LowCards.com Complete Credit Card Index, the average advertised APR for credit cards is 14.45%, the same as last week. Six months ago, the average was 14.26%. A year ago the average was 14.29%

Last year was expensive: The cost of living is rising faster than incomes, forcing many Americans to take on more debt to make ends meet Consumer Credit Card Debt Falls for 27th Consecutive Month. And interest rates, which have risen in response to inflation, make debt more expensive.

NerdWallet’s annual look at household debt found that credit card balances carried over from month to month have increased over the past 12 months, totaling an estimated $488 billion by December 2022 [1]. Mortgages, auto loans, student loans and overall debt have also increased over the past year.

Here’s a breakdown of what US households owed in total and the average amount per household with each type of debt as of December 2022 [2]:

Type of debt

The total amount owed by the average American household with that debt

Total U.S. Debt

Percentage change in total debts from 2021 to 2022

Any type of debt*

$169,242

$16.9 trillion

+7.83%

Credit cards (total)**

$18,054

$1.11 trillion

+15.25%

Credit cards (revolving)

$7,919

$488.12 billion

+32.64%***

Mortgages

$227,188

$11.92 trillion

+8.33%

Car loans

$29,251

$1.55 trillion

+6.06%

Student loans

$59,149

1.6 trillion dollars

+1.19%

* This debt can include mortgages, home equity lines of credit, car loans, credit cards, student loans and other household debt, according to the Federal Reserve Bank of New York.
**Total US credit card debt outstanding includes revolving and transaction balances.
***Revolving debt was calculated using the past five-year average of the percentage of credit card debt considered revolving (carried out month-to-month) as opposed to transactions (paid in full each month). We have received these numbers from Experian in the past Consumer Credit Card Debt Falls for 27th Consecutive Month. The credit bureau refused to provide revolving vs. transaction data for 2022.

A note on this year’s data

Our annual study analyzes government data—from such sources as the U.S. Bureau of Labor Statistics and the Federal Reserve Bank of New York—to see how household debt has changed over the past year. NerdWallet also recently commissioned an online survey of more than 2,000 US adults by The Harris Poll to learn more about how Americans feel about their debt and how they think future interest rate hikes will affect their finances. We also asked how Americans use buy-now, pay-later services, how their income has (or hasn’t) kept up with inflation, and their financial concerns in the coming year Consumer Credit Card Debt Falls for 27th Consecutive Month.

Key takeaways
Prices are rising faster than incomes. Over the past year, median household income has risen by just 4%, while the overall cost of living has jumped by 8% [3]. The survey found that nearly half of employed Americans (45%) say their wages have not increased enough to keep up with inflation in the past 12 months.

Buy now pay later services can mean millions deeper in debt. Nearly 1 in 5 Americans (18%) say they have used a BNPL service in the past 12 months Consumer Credit Card Debt Falls for 27th Consecutive Month.

Consumers are worried about finances in the coming year. Nearly 7 in 10 Americans (69%) have financial concerns in the next 12 months. The #1 worry is going into/more debt to cover necessities (31%), followed by having to pay higher interest on debt (27%).

The average amount of credit card interest paid by households increased due to recent Federal Reserve rate hikes and rising amounts of revolving credit card debt. American households with credit card debt will pay an average of $1,380 in interest this year [4]. And this is provided that interest rates will not be higher.

“Credit card debt is often thought of as the result of reckless spending, but for many Americans, that’s simply not true,” says Sara Rathner, NerdWallet’s credit card expert. “Consumers are feeling the pressure of higher prices and interest rates, and paychecks just aren’t keeping up. This forces many to make difficult decisions, such as going into debt to pay for necessities Consumer Credit Card Debt Falls for 27th Consecutive Month.”

Cost of living is significantly outpacing income growth over last year
Each year, we track the growth in the cost of living compared to household income over the previous decade to see if income is keeping up with spending. Using this 10-year time frame, we find that income has kept pace:

Median household income has increased by 44% since 2012, while total spending has increased by 28% over the same period [5]. But the story changes radically when you look at short-term growth due to the COVID-19 pandemic and unusually high inflation Consumer Credit Card Debt Falls for 27th Consecutive Month.

Looking at growth over the last three years – from pre-pandemic to now – median income has increased by 7%, but total costs have increased by almost 16% [6]. This includes a 27% increase in transport costs, a 20% increase in food and beverage costs and a 14% increase in housing costs Consumer Credit Card Debt Falls for 27th Consecutive Month.

And that may partly explain why, according to our survey, 45% of Americans say their overall financial health is worse now compared to before the COVID-19 pandemic Consumer Credit Card Debt Falls for 27th Consecutive Month.

In the survey, nearly half of employed Americans (45%) said their pay did not increase enough to keep up with inflation in the past 12 months. Data on the consumer price index and income growth bear this out. Over the past year we have seen prices rise – 8.2% annual inflation from September 2022. This includes a 13% rise in transport costs, 11% in food and drink costs and 8% in housing costs. Meanwhile, median household income rose by only 4% during this time [3] Consumer Credit Card Debt Falls for 27th Consecutive Month.

Consumers are doing what they can to fight higher prices. According to the survey, nearly 4 in 5 Americans (79%) said they took action in the past six months in response to inflation: 42% of Americans said they drove less and 39% said they shopped more stores. tags and raw staples. Nearly 1 in 5 Americans (19%) say they have taken on more debt in the past six months in response to inflation Consumer Credit Card Debt Falls for 27th Consecutive Month.

“Reviewing your recent spending for places where you could cut back and using any other resources to save or pay down debt can be a big help.”
Sara Rathner, NerdWallet credit card expert
Debt makes Americans feel anxious, overwhelmed
Over the past year, nearly 3 in 10 Americans (28%) say their total debt has increased, with 14% of Americans saying they have incurred health care debt during that time. And that debt is probably taking a toll.

According to the survey, 41% of Americans who currently have debt feel anxious about it, and 35% feel overwhelmed. This feeling of being overwhelmed is more prevalent among Americans with annual household incomes under $75,000 who currently have debt: 44% of this group feel this way, compared to 27% of indebted Americans with annual household incomes of $75,000 or more Consumer Credit Card Debt Falls for 27th Consecutive Month.

BNPL may be hiding additional debt

Our annual analysis of household debt focuses on traditional types of debt – such as credit cards, mortgages and student loans. Government sources such as the Federal Reserve Bank of New York collect and report extensive data on such debts Consumer Credit Card Debt Falls for 27th Consecutive Month. However, the debt problem may go even deeper due to the proliferation of short-term loans provided by Buy Now Pay Later services, e.g.

Sources