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Americans are feeling less confident about paying their credit card bills in full this holiday season than they did during the last one, according to a new report from CompareCards by LendingTree.
The latest CompareCards Credit Card Confidence Index shows that only 40% of cardholders feel “very confident” about paying their credit card’s monthly statement balance in full this month. That’s down from the 46% that said so in November 2018, showing that Americans are a little more jittery about handling their holiday expenses than they were a year ago.
Every month, CompareCards asks cardholders to gauge how confident they are in their ability to pay their monthly credit card statement in full that month. We also ask how often in the past six months cardholders have paid their bills in full and how often they expect to do so in the next six months. In addition, we ask those who don’t expect to pay in full why they feel that way. Add it all up and you get the Credit Card Confidence Index.
- 40% of cardholders feel “very confident” about paying their credit card’s monthly statement balance in full this month. That’s down slightly from the 42% that said so in October, but well below the 46% that said so in November 2018.
- Just 26% said they paid their card statement balance in full in all of the past six months, the lowest number seen in the past 15 months and 10 percentage points lower than November 2018.
- 34% of women said they feel “very confident” about paying their statement balance in full this month, compared to 46% of men. That percentage of women is the lowest in the past 15 months.
- The most common reason people don’t think they’ll pay their card balance in full this month? Other expenses are taking priority.
A less confident holiday season
Last month’s confidence index showed a small uptick in cardholder confidence for the first time since April. It didn’t last.
The percentage of cardholders feeling “very confident” about paying their bills this month dropped a bit from last month. (The percentage who said they felt “not at all confident” remained flat at 19%.) However, when comparing the numbers to the previous year, a bigger change is evident. Cardholders are 6 percentage points less likely to say they’re very confident than they were a year ago. That doesn’t bode well for the holiday season.
Women continue to be less confident than men, with the percentage of women saying they’re very confident in being able to pay their credit card bill (34%) falling to the lowest point in the survey’s 15-month history. However, men’s confidence has fallen as well. This month, 46% of men said they were “very confident,” well down from 54% last November.
Fewer paying in full every month
Just 26% of cardholders said they paid their statement balance in full in each of the past six months. That’s a 7 percentage point drop from last month and the lowest number ever seen in the survey. It’s such a large drop that I want to wait to see what next month’s numbers look like before I make any major judgments. It is an eye-opener, however.
Interestingly, the number of cardholders saying they never once paid in full in the past six months actually decreased from 22% to 21%. However, we saw more and more respondents land in the middle: 14% said they paid in full in four of the six months, and 11% in three of the months, for example. Both of those are at or near the highest levels seen in the survey’s 15-month history. It wouldn’t surprise me to see more cardholders in that middle ground in coming months.
What’s keeping people from paying their card statement balance in full? The most common response that other expenses were taking priority. It’s likely that holiday shopping is one of those expenses for many people. However, for some, it might simply be the high cost of life in 2019.
The bottom line: Be cautious this holiday season
Numbers released by the Federal Reserve Bank of New York showed that while American are still piling up debt of all kinds, there hasn’t been much growth in delinquencies or bankruptcies, indicating that consumers are doing a good job of handling their business.
That’s not the full story, though. The truth is that just because you’re not delinquent that doesn’t mean that you’re doing well, and I believe this month’s Confidence Index is further proof that many, many American cardholders are in this squishy middle when it comes to paying their bills. They’re paying on time, but their debts just keep growing. They feel fairly confident, but they definitely don’t feel as good as they used to.
A recent Commerce Department report said retail sales rose in October, but purchases of big-ticket items decreased. This seems to be a perfect example of Americans’ waning confidence. A truly confident consumer wouldn’t feel any need to hold back on making that big purchase, but the Commerce Department data seems to indicate that Americans are doing just that, which could mean fewer high-dollar items under the tree this Christmas.
As debt continues to grow and break records, none of this should be surprising. Eventually, something has to give. At some point, there will simply be too much debt for Americans to handle without a big spike in delinquencies and bankruptcies and such. We’re not there yet, and we may not get there until some outside force – a recession, a natural disaster, political upheaval — changes things. But it’s important to understand that good economic times don’t last forever, so it would be wise to focus on knocking down your credit card debt and building your emergency fund as much as you can while the economy remains strong.
It may not be easy, and it may not be fast, but there are things you can do to make a difference. Call your card issuer to lower your APR. (It works!) Get yourself a 0% balance transfer card. Find yourself a savings account that earns more than your current one. These things may not change your life, but they do make a difference, and when that economic downturn does eventually comes and you’re on more stable financial footing, you’ll be glad you did them.
CompareCards by LendingTree commissioned Qualtrics to conduct an online survey of 791 Americans with a credit card, with the sample base proportioned to represent the general population. The survey was fielded Nov. 1-4, 2019.