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Consumers felt more confident in their ability to pay their credit card bills in full in October, according to a new report from CompareCards.com. It’s the first monthly increase since April.
Each month, CompareCards surveys American credit cardholders to gauge how they feel about their ability to handle their credit card bills. The survey asks cardholders how confident they are about paying their credit cards’ statement balance in full this month, how frequently they’ve paid their statement balance in full in the previous six months and how many times they expect to do so in the next six months. The results make up the Credit Card Confidence Index.
Recent months had seen an unmistakable decrease in confidence among cardholders, but October’s data bucked that trend. Confidence grew, though it remained below average levels seen in the past year. The question is whether this month is the beginning of a new, more positive trend or just a blip.
- Cardholders’ confidence increased for the first time since April. 42% of cardholders said they were very confident in their ability to pay their credit card monthly statement in full this month. It’s the highest number since June. The percentage saying they felt “not at all” confident shrunk to 19%, down from 23% last month.
- 33% of cardholders said they paid their card statement balances in full in each of the past six months, the highest number since June, though still below the average for the past year. 22% of cardholders said they had never paid their statement balance in full in the past six months, down 1 percentage point from last month.
- Confidence grew for both men and women, though a decided gender gap in confidence remains. Just 11% of men said they were “not at all” confident in their ability to pay their card statement balances in full this month, compared to 28% of women. (Last month, those numbers were 15% and 31%, respectively.)
- 37% of men said they paid their card statement balance in full in each of the past months, a 6–point jump from September. Just 28% of women said so, a 1 -point dip from the previous month.
The bottom line: Don’t expect this to last long.
Yes, cardholder confidence grew, reversing the trend seen in recent months. However, with monthly statistics like the Credit Card Confidence Index, things rarely move in a straight line. Numbers may rise or fall a bit on a month-to-month basis, but what’s most instructive is to look at the longer-term trends. That’s certainly the case with this month’s index.
Even if we see confidence continue to grow in the next month or two, there’s still plenty of reason to believe that longer term trends will continue to dip toward the negative. Most experts believe we’re in the 8th or 9th inning of this economic expansion and believe that an economic slowdown is coming in the next year or two. And many strong economic data points have nowhere to go but down. Mix in a volatile stock market and what promises to be a turbulent election, and most signs seem to point to consumer confidence dipping slightly in coming months.
If you’re feeling apprehensive, the best thing you can do is knock down that credit card debt and build up your rainy-day fund. Your credit card debt likely means that you haven’t been able to put enough money away to protect you in the case of a job loss, medical emergency or some other unpleasant surprise. Now’s the time to change that. To attack that credit card debt, consider getting a 0% balance transfer credit card or asking your card issuer for a lower interest rate on one of your current cards. You have more power to change things than you realize. You just have to be willing to take that first step.
CompareCards by LendingTree commissioned Qualtrics to conduct an online survey of 760 Americans, with the sample base proportioned to represent the general population. The survey was fielded Oct. 1-3, 2019.