Have Americans Learned Their Lesson With Credit Cards?


The Great Recession drastically impacted personal finances of many households. During the credit meltdown, family budgets were reduced and deleveraging became a top priority. The recession technically ended in the summer of 2009, but Americans are still showing some financial restraint as they continue to slow their addiction to credit cards.

Consumers are not returning to their plastic-charging ways as fast as originally thought. In the third-quarter, Americans added $11.9 billion of credit card debt, down 30 percent from the $16.9 billion increase in the prior quarter, according to the latest report from CardHub.com. Compared to the third-quarter of 2012, the net amount of credit card debt added was down 8 percent.

In six out of the past seven quarters, consumer credit card debt figures have improved relative to the year before. Furthermore, the 3.19 percent credit card charge-off rate is at its lowest point since the first quarter of 2006. Other than that single quarter, there are now fewer charge-offs than at any point since the beginning of 1995. However, the total debt load has continued to increase and the average household owes more than they did in the prior quarter.

“It’s encouraging to see demonstrable improvement in the economic landscape after all that we’ve endured in recent years,” said CardHub CEO Odysseas Papadimitriou, a credit card industry veteran. “More jobs mean fewer families struggling to pay the bills, less uncollectible debt on bank balance sheets, and light at the end of the economic tunnel. Now, we just need to shift our mindset away from accruing debt at a slower pace and toward paying down what we owe as well as developing sustainable habits moving forward.”

As the chart below shows, the average household owes $6,690 to credit cards, up from $6,658 in the second quarter. Looking ahead, CardHub.com estimates that Americans will add $33.4 billion in credit card debt for 2013, revised lower from their $41.2 billion estimate made earlier this year.

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