CardHub study: Consumers’ 4Q credit card binge erases earlier payback

March 9, 2016

WASHINGTON (3/9/16)--Credit card balances ballooned in the fourth quarter of 2015--overcoming payback gains made at the first of the year and overwhelming 2014’s total new credit card debt--reported consumer financial website CardHub.

In its 2015 credit card debt study, CardHub said consumers used tax refunds and annual salary bonuses to repay nearly $35 billion in credit card debt in the first quarter. However, consumers “quickly erased [the] gains with the largest second-, third- and fourth-quarter binges since CardHub began conducting this study in 2009,” the report said.

The $52.4 billion in new credit card debt incurred in 4Q 2015 is the largest fourth-quarter buildup since the Great Recession and is more than the amount of card debt added in total from 2009, 2010 and 2011, CardHub said.

The average household with credit card debt now owes $7,879--the highest amount since the Great Recession and roughly $500 below the tipping point CardHub defines as being unsustainable.

Credit unions, however, are not seeing double-digits in credit card lending, noted Perc Pineda, senior economist at the Credit Union National Association. “If you look at the G.19 consumer credit statistical release by the Federal Reserve this week, it shows that consumer revolving credit increased 5.2% in 2015, and the preliminary January 2016 numbers show a decline of consumer revolving credit by 1.3%,” he said.

“This is consistent with our monthly credit union estimates that show in December 2015, credit card lending increased 5.7% from a year ago. And in January 2015, credit card lending at credit unions fell 0.9%," Pineda added.