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Credit card balances dipped in November, according to the latest consumer debt data from the Federal Reserve.
The latest Fed data shows that consumer credit card debt fell at an annualized rate of 2.7% in November, leaving Americans’ outstanding consumer credit card balances at $1.086 trillion. That’s just below the all-time record of $1.089 trillion set in October.
November’s decrease is the biggest since a 3.19% drop in March. It is also the first November drop of more than a fraction of a point since 2013. However, given the unmistakable upward trend in balances in recent years, there’s no reason to believe that any sort of long-term downward movement is in the cards.
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 …
Fewer cardholders carried a balance in Q2 2019
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.According to data from the American Bankers Association, 43% of credit card accounts carried a balance as some point in Q2, 31% of accounts were active but didn’t carry a balance and 26% of accounts were dormant for the quarter. The number of accounts that didn’t carry a balance stayed grew by 1 percentage point in the second quarter, while the percentage of those revolving a balance fell to the lowest levels seen in two years. 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 is just below a record high. It fell 2.7% in November, the most recent month for which we have data, but there’s no reason to believe that debt won’t continue to climb into the future. The Federal Reserve shows that revolving debt (made up mostly of credit card debt) now stands at $1.086 trillion, as of November 2019. That’s just off the record high of $1.089 trillion set in October, and it is well above the pre-recession peak from 2008 and 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. Unfortunately, it looks as if it is here to stay, at least for a while.
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 continue to fall, thanks to the Fed
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. The Fed has reversed course in recent months, implementing three rate decreases in recent months.
Still, rates are sky high. Here’s where credit card APRs currently stand …
The latest CompareCards.com data on credit card APRs shows that the average APR with a new credit card offer is 20.44%, with the average card offering an APR range of about 17% to about 24%, with your rate varying based on your creditworthiness.
The latest Federal Reserve data showed that the average APR for all credit card accounts fell to 14.87% in the fourth quarter of 2019. That’s down from 15.10% in the prior quarter. Meanwhile, APRs for cards that are accruing interest are also falling — again, likely thanks to the Fed — down to 16.88% from 16.97% a quarter ago.
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 flat throughout 2019
According to the most recent delinquency data from the Fed, the 30-day delinquency rate (or the number of folks who are currently at least 30 days late with their credit card payment) reached 2.58% in the third quarter of 2019. That equals its highest level since 2013, though rates have largely been flat in 2019. (The rate has moved just one-hundredth of a point in 2019.) The current rate is still quite low by historical standards — the average since the Fed began collecting that data in 1991 is about 4% — and it’s far below the record 6.77% rate we saw in April 2009, in the depths of the Great Recession.
Even though the number are still relatively low, there is some cause for concern. The combination of high interest rates and record credit card debt — along with rising student loan debt and other debt burdens — is a major burden for many Americans, and eventually something will have to give. Good times just don’t last forever, so it’s incredibly important that people work to make 2019 the year they pay down their debts in earnest because it’s likely only going to get harder from here.