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Credit cardholders’ confidence in their ability to pay their credit card bills dipped slightly in February, according to the latest CompareCards.com Credit Card Confidence Index.
Every month, we ask credit cardholders to tell us how confident they feel in their ability to pay their credit cards’ monthly statement balances in full this month and six months from now. We also ask how often they’ve paid their statement balances in full in the past six months. Our latest report shows that after several months of growth, Americans’ confidence took a small step back in February.
- 23% of cardholders said they were “not at all” confident in paying their card statement balances in full this month, a six-month high. Meanwhile, the number of people saying they were “very” confident dipped slightly — from 48% to 46% — the first drop in the survey’s six-month history.
- The number of cardholders who said they never paid their statement balances in full in the past six months rose from 20% to 23%, the highest since October. Meanwhile, the number of those who paid their statement balances in full every month, dipped slightly from 39% to 38%, but remained near six-month highs.
- Nearly 3 in 10 women (28%) said they were “not at all” confident they could pay their statement balances in full this month, compared to 19% of men.
- 1 in 4 women (26%) said they never paid their statement balances in full once in the past six months, compared to 20% of men.
- Gen Xers (27%) and baby boomers (26%) are the most likely to have never paid their balances in full in the past six months. That compares to 21% of older millennials and 9% of young millennials.
The bottom line: Don’t expect this decline to continue – at least not yet.
Whenever new data shows a change in recent trends, there’s a tendency to overinflate the importance of the changes. Ultimately, only time and the benefit of hindsight will tell us whether this dip is the beginning of a larger downward trend in consumer credit card confidence or whether it is simply an anomaly. However, in the short term, the latter seems more likely to me, especially when you consider the uncertain impact of the long partial government shutdown that ended just days before this survey took place.
The long-term outlook is a whole other animal. I firmly believe that many Americans are closer to the financial edge than many economic numbers show and that much of Americans’ confidence is pretty fragile. Yes, delinquencies are low. Yes, unemployment is low. Yes, Americans’ ratio of card debt to expendable income is low compared to the recession. However, as the shutdown showed, many people are one missed paycheck away from real trouble. That means that when the economy heads south, it may end up hitting people harder than some might expect.
For now, the economy remains relatively strong, so I don’t expect any major shift in consumers’ credit card confidence in the immediate future. However, I would suggest that people focus on paying down their debts and make an emergency fund a priority in 2019. It is not something we want to think about when times are good, but that’s precisely when we should work on them. After all, good times never last, sadly, and putting a little extra money away when things are good means that you’ll be better prepared when the party finally comes to an end.
Source: CompareCards by LendingTree commissioned Qualtrics to conduct an online survey of 2,391 Americans, with the sample base proportioned to represent the general population. The survey was fielded Feb. 4-19, 2019, and the margin for error for all respondents is +/- 2.0%.