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Credit card balances in America fell slightly in March. The latest consumer debt data from the Federal Reserve shows that consumer credit card debt decreased 2.5% in March, shrinking Americans’ outstanding consumer credit card balances to $1.057 trillion.
Don’t get too excited, though. This monthly report from the Fed occasionally shows small month-to-month decreases. (The last one was in December.) But no one expects this decrease to be the beginning of a trend. All signs point to consumer credit card debt continuing to grow.
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 …
Most active credit card accounts carried a balance in Q4 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.According to data from the American Bankers Association, 44% of credit card accounts carried a balance as some point in Q4, 30% of accounts were active but didn’t carry a balance and 25% of accounts were dormant for the quarter. The number of accounts that didn’t carry a balance stayed basically flat in recent quarters. 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 at near-record highs. It dipped slightly in March, the most recent month for which we have data, but the upward trend is widely expected to continue in the future. The Federal Reserve shows that revolving debt (made up mostly of credit card debt) now stands at $1.057 trillion, as of March 2019. That’s just slightly below February’s all-time record high, but it is well 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. 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 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 jumped to 15.09% in the first quarter of 2019. That’s a significant jump, in line with those that we’ve seen in previous quarters. Meanwhile, APRs for cards that are accruing interest are also rising even faster — up slightly to 16.91%.
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 climbing, but remain low
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 2.54% in the fourth quarter of 2018, tying its highest level since 2013. That’s 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.