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How are the consumers doing on their credit cards?

Posted on Mon May 6 2024, 5:12
Understanding how consumers are doing on their credit-cards tells a lot about the financial health of American consumers (the biggest driver of US GDP). This report provides the latest situation as of April 24, 2024.

About 68% of the American GDP is based on consumption. So, studying the American consumer is critical to get a grip on U.S. economy. The best way to get a handle on the american consumer is to study how they are doing on their credit cards. Here, we compile various important data points that help us understand the financial health of the American consumer.

Growth in Credit Card Debt

After a steep fall during Covid, the credit card debt has been growing at a rapid pace. As of April 24, 2024, the credit card debt stands at $1051.2 Billions.

0 250 500 750 1000 2010 2015 2020 2025 $, Billions Credit Card and Revolving Debt Source:, Federal Reserve Bureau

The credit card and revolving debt grew at -2.9% annualized rate in the last 4 weeks. Just as a reference, in the pre-covid period, it grew at ~5% annually. During the 2008 crisis, the credit card debt grew at 10-20% rate from Oct 2008 and Jun 2009.

-60 -40 -20 0 20 40 2016 2018 2020 2022 2024 Percentage Month-o-Month (Annualized) Year-o-Year Growth in Credit Card and Revolving Debt Source:, Federal Reserve Bureau

Interest Rate on Credit Card Plans

The interest rates on credit card plans are around 21.59%. These rates ranged between 12%-14% during most part of the last decade.

12 14 16 18 20 22 2010 2015 2020 2025 Percentage Credit Card Plan Rates Source:, Federal Reserve Bureau

Delinquency Rates on Credit Cards

The most important metric that shows the health on consumer is the deliquency and charge-off rates on credit cards. As on December 31, 2023, Credit card delinquencies increased to 3.1% rate. At the same time, charge-offs on credit cards grew to 4.24% rate.

2.5 5.0 7.5 10.0 2010 2015 2020 Percentage Charge-off Rate Deliquency Rate (%) Delinquency and Charge-Off Rates Source:, Federal Reserve Bureau

Consumer's Ability to Pay Debt

The Consumer Debt Service Ratio is a good way to understand if the consumer is struggling to make the debt payments or is able to make them easily. This ratio measures the percentage of disposable income that goes to make the credit card payments.

0 2 4 6 2010 2015 2020 % of Disposable Income Consumer Debt Service Levels Source:, Federal Reserve Bureau

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