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This month, consumer confidence in their ability to pay off their credit card bills shot to its highest level since June, according to a new report from CompareCards by Lending Tree. But consumer confidence remains lower than it was one year ago.
Each month, CompareCards asks cardholders how confident they are that they can pay their credit cards’ monthly statement balance in full this month, as well as how often they’ve paid their statement balances in full in the previous six months and how often they expect to do so in the coming six months. The results make up CompareCards’ Credit Card Confidence Index.
This month’s numbers show that while consumer credit card confidence has rebounded somewhat after months of decline throughout 2019, it is still lagging behind what we saw in late 2018.
- Consumer credit card confidence jumped in December to its highest level since June but remains lower than last December.
- Why don’t people think they’ll pay their bills off in full? They have other expenses to prioritize or, simply, the balance is just too high.
- The survey shows 33% of cardholders said they paid their statement balance in full in each of the past six months – up from 26% a month ago, but still down from 37% in December 2018 – while 19% said they never did so.
Confidence improving but still below last year’s numbers
This year has not been a great one for consumers’ credit card confidence. In December 2018, 46% of cardholders said they felt “very confident” in their ability to pay their credit cards’ monthly statement balance in full that month. In January, that number climbed to another record high of 48%. By September, however, that number had fallen to a new low of just 38%.
The good news is that the final month of 2019 saw a rebound: 44% of cardholders are “very confident” in their ability to pay this month’s credit card statement balance in full this month, up from 40% in November. That improvement still hasn’t brought consumers fully back to levels seen in late 2018 and early 2019, but it provides some reason to believe that that may change soon.
We also saw a major month-to-month increase in the number of cardholders who said they paid their bills in full in all of the past six months. Of surveyed cardholders, 33% said so in December, up from 26% in November. That 26% number may be a statistical anomaly. It’s well below the 33% seen in October and 4 percentage points below the record low of 30% seen in August and September.) Meanwhile, just 19% of cardholders said they never paid their bills in full a single time in the past six months, the lowest total since June.
Women’s credit card confidence on the upswing
One reason to think confidence numbers might improve: Women appear to be feeling better about their situation. While men’s confidence remained largely flat in the second half of the year, women’s numbers ended the year on a high note. More than 4 in 10 women (41%) say they’re very confident in their ability to pay that card statement balance in full this month. That’s up from 34% just a month ago and marks the first time that number has topped 40% since June, when it stood at 44%. Ultimately, it is still down a tick from the 42% we saw in December 2018, but is headed in a positive direction.
Another positive sign for women is that they were slightly more likely than men to have paid their card balance in full in all six months (34% of women said yes, compared to 33% of men). That’s just the second time in 16 months that has happened.
Not all of the signs are rosy, though. Women are still far more likely to say they never paid their card balances in full in the past six months (24% of women compared to just 15% of men).
The bottom line: Expect confidence to dip in 2020, but don’t rule out increases in the short term
After seeing consumer credit card confidence fall by 10 percentage points between January and September, the last several months’ numbers have followed a different pattern: up 4 points in October, down 2 points in November, up 4 points again in December. Judging by that data, it’d be easy to predict a 2-point drop in credit card confidence next month. A decline would also make sense as consumers wrestle with the aftermath of the holiday season. (Note: 13% of those who weren’t confident in paying their statement balances in full this month blamed it on holiday spending, while nearly twice that many blamed it on “other expenses.” In other words, life.) That’s part of the reason why 0% balance transfer cards tend to become popular at the first of the year. People are making New Year’s resolutions and looking for ways to knock down their debt.
Still, though I firmly believe that we’ll continue to see at least a slight decline in confidence throughout 2020, it wouldn’t surprise me to see confidence tick up a bit in January. December’s increase seems to indicate that consumers have gotten this far through the holiday season without breaking the bank, so it’s possible that they’ll emerge on Jan. 1 still feeling good about their finances and with their credit card confidence intact. That would make for a positive start to a year that – if only because of the upcoming election – promises to be volatile.
I don’t expect that positivity to last long-term, though. There’s so much debt out there, and I believe it is starting to take a toll. It may not be causing widespread delinquencies, but that doesn’t mean that people aren’t still struggling as their debt grows. In fact, I’d bet that part of the reason people are feeling confident in December is that they’ve dialed back their spending a bit this holiday season. Time will tell.
Your best move is to make 2020 the year you focus on knocking down your credit card debt for good. It won’t be easy and likely won’t be quick, but once you see that $0 balance, that feeling you get will make all the struggles worth it.
CompareCards by LendingTree commissioned Qualtrics to conduct an online survey of 1,163 Americans with a credit card, with the sample base proportioned to represent the general population. The survey was fielded Dec. 13-16, 2019.