*Editorial Note: This content is not provided or commissioned by the credit card issuer. Any opinions, analyses, reviews or recommendations expressed in this article are those of the author’s alone, and may not have been reviewed, approved or otherwise endorsed by the credit card issuer. This site may be compensated through a credit card issuer partnership.
This article was last updated Mar 07, 2019, but some terms and conditions may have changed or are no longer available. For the most accurate and up to date information please consult the terms and conditions found on the issuer website.
Americans’ credit card balances have hit another peak. The latest consumer debt data from the Federal Reserve shows that consumer credit card debt rose 3% in January, pushing Americans’ outstanding consumer credit card balances to $1.058 trillion. That’s the highest it has ever been — even well above the pre-recession peaks in 2008 — and it is clear that the number is just going to keep climbing.
This page is devoted to tracking Americans’ credit card use each month. We update it regularly, looking at how much debt people have, how often they carry a balance month to month, how often they pay their credit card bills late and more.
To start, here are some of the key numbers you need to know about credit card debt in the United States. We’ll dive into the numbers down the page …
Nearly 6 in 10 credit card accounts carried a balance in Q3 2018
Job No. 1 for anyone with a credit card is to pay that balance off in full at the end of each month. But we all know that life happens, and that means that it’s not always possible to pay off your credit cards each month.
Unfortunately, most people with an active credit card account don’t always pay their bills in full. Nearly 6 in 10 active card accounts (59%) carried a balance at some point in the third quarter of 2018, according to data from the American Bankers Association. The number of accounts that didn’t carry a balance stayed basically flat since the second quarter of 2018. While it’s great news that we’re not seeing more people carrying balances, the fact that so many people are carrying credit card debt in generally good economic times is troubling. Because they have to pay down those debts in good times, it means that they’re probably not putting enough money for when those good times turn bad.
Card debt tops pre-recession levels, shows no sign of slowing
Americans’ credit card debt has never been higher. The Federal Reserve shows that revolving debt (made up mostly of credit card debt) has reached $1.058 trillion, as of January 2019. That’s above the peak from 2008, and it is light-years beyond the $281 billion that we saw 25 years ago in January 1993.
Card debt showed hockey-stick growth until the financial collapse in 2008, when revolving debt fell from more than $1 trillion in the summer of 2008 to $832 billion in April 2011. But, as you can see in the chart below, the hockey stick has since returned. Now, with the most recent Fed report showing another jump in January 2019, there’s no reason to think that debt will do anything but grow in coming months.
The big outstanding question is: How much and for how long can credit card debt rise before we see real signs of trouble, such as spikes in late payments? As you’ll see further down the page in the section about delinquencies, we’re not there yet, but it can’t keep rising forever. That debt is only going to get more and more expensive, especially when you consider the fact that interest rates just keep rising.
APRs keep rising as card debt keeps growing
After several years of relative stability after the Great Recession, credit card rates have climbed steadily in the past few years, driven largely by the eight rate increases that the Federal Reserve has implemented since 2015.
Here’s where credit card APRs currently stand …
CompareCards.com data showed that the average APR for a new credit card offer stayed at 16.91% in December. Unfortunately, however, the latest Federal Reserve data showed that the average APR for all credit card accounts grew to 14.73% in the last quarter of 2018. That’s a jump of 0.35 percentage points, meaning that it’s not just the Fed’s latest quarter-point rate increase that is driving rates higher. APRs for cards that are accruing interest are rising even faster — up 0.4 percentage points to 16.86%.
Of course, you can make those interest rates a moot point by paying your card debt in full, but far too few people do. Meanwhile, those who carry a balance have seen their rates rise.
Here’s data from the Fed showing changes in the average APR for people who have accrued interest. It’s not pretty.
Credit card delinquencies remain low
Despite record-high debt and record-high interest rates, people seem to still be handling their business when it comes to making their credit card payments on time each month. The 30-day delinquency rate for credit cards was just 2.49% in the third quarter of 2018, according to the latest delinquency data from the Federal Reserve. That’s still quite low by historical standards, and it’s far below the 6.77% rate we saw in April 2009, in the depths of the Great Recession.
While those numbers are impressive, it’s hard to see them staying that low for much longer. The combination of high interest rates and record credit card debt — along with rising student loan debt and other debt burdens — will eventually simply be too much for Americans to handle. Again, we’re not there yet, but the good times can’t last forever, so it’s incredibly important that people work to pay down their debts now because it’s only going to get harder from here.