Post-crisis drop in consumer card use reversing
June 30, 2014 – Credit card debt is on the rise again, reversing a trend that pushed consumers’ use of revolving debt down more than 15 percent in the wake of the financial crisis, American Banker reported Friday.
Federal Reserve data for April, as shown in NAFCU’s June 9 Macro Data Flash report, showed an increase of 12.3 percent in revolving consumer credit, seasonally adjusted. American Banker quoted several economists pointing to this and other metrics to show increased comfort with “borrowing with plastic” recently.
The paper said: “Household credit on bank credit cards grew by 2.1% in May, which was the highest growth rate since the height of the financial crisis, according to a new report by Moody's Analytics. And analysts at Nomura recently declared that U.S. consumers' propensity to carry credit card debt from month to month is at its highest level since October 2008.”
The Nomura report stated: “We now believe we're at the early stages of a postcrisis inflection point in the level of spending that consumers are willing to finance on credit cards.”
Other economists cited pent-up demand for large purchases that consumers have postponed during the economic recovery, but said many young people are still uneasy using credit cards. A Credit Suisse report said the “most dramatic” increase of consumers with no credit cards has been in the 18-29 age group, since 2005.
American Banker article
NAFCU Macro Data Flash