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Americans’ Credit Card Confidence Drops Significantly in July

Americans’ Credit Card Confidence Drops Significantly in July

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This article was last updated Jul 19, 2019. Terms and conditions may have changed. For the most accurate information, please consult the issuer website.

Americans’ credit card confidence took a big hit in July, reaching an 11-month low, according to a new report from CompareCards.com.

Each month, CompareCards surveys American credit cardholders about their ability to pay their credit card bills. We ask how confident they are that they’ll be able to pay their cards’ monthly statement balance in full this month, how many times in the past six months they’ve paid their statement balance in full and how many times in the next six months they expect to do so. The result is the CompareCards Credit Card Confidence Index.

Confidence has been high – and relatively stable – for most of the 11 months in which we’ve put out the Index. However, this month’s Index was different. It showed a significant drop in confidence for the first time in those 11 months. The lingering question is whether this is the start of something new or just a one-month anomaly.

Key findings: 

  • Just 40% of cardholders said they felt “very” confident in their ability to pay their credit cards’ monthly statement balance in full this month. That’s a 7-percentage-point drop and the lowest number in the Index’s 11-month history. However, the percentage of cardholders who said they were “not at all” confident fell 1 percentage point.
  • Just 43% of men said they were very confident in being able to pay the card statement balances in full this month, an 11-month low. That compares to 38% of women.
  • 20% of cardholders said they hadn’t paid their card statement balance in full a single time in the past six months. That’s the highest total since March and marks the third consecutive monthly increase.

Bottom line: Expect this to be more of a blip than a trend.

The drop in confidence that we saw in July is significant. The percentage of cardholders who said they were very confident in their ability to pay their monthly statement balance in full this month hovered between 46% and 48% from November 2018 through June of this year, so when this month’s data showed that number at 40%, it was an eye-opener. However, I don’t expect this to be the start of a trend.

Life can get expensive in the summertime. Family vacations can mean higher credit card bills, making it harder to pay in full, and so can summer camps and other costs that pile up once school is out. Higher utility bills, driven up thanks to the oppressive summer heat, can cause strain on a budget, too. Add it all up and it makes sense that we might see people struggle a bit more than usual to pay their credit card bills in the summertime. I would bet that’s at least partly responsible for this month’s lower numbers.

When we ask cardholders to rate their confidence level, we ask them to do so on a scale of 1 to 5, with 1 being “not at all” confident and 5 being “very” confident. While the percentage of cardholders who rated their confidence a 5 fell significantly this month, it didn’t fall far. The percentage rating their confidence at a 4 (20%) was the highest in the Index’s history, as was the percentage rating their confidence at a 3 (17%). Meanwhile, those rating it at 1 or 2 actually dipped by 1 percentage point each (18% and 5%, respectively).

That means that while fewer people are “very” confident this month in their ability to pay their card statement balance in full, most Americans are still at least somewhat confident, and that’s a good thing. Given that, I expect those “very confident” numbers to rebound, at least somewhat, next month and moving forward, at least until we start to see other signs of a larger economic downturn.

Methodology

CompareCards by LendingTree commissioned Qualtrics to conduct an online survey of 751 American credit cardholders, with the sample base proportioned to represent the general population. The survey was fielded July 8-12, 2019, and the margin for error for all respondents is +/- 3.6%.


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