Fed: Card balances ticked up in April
Credit card balances inched higher in
April, marking a rebound from March, amid signs of improvement in the key area of housing.
Revolving debt, which is
mainly made up of credit card balances, climbed $700 million in April, reversing March's revised $100 million reduction, the U.S.
Federal Reserve said in its latest G.19 consumer credit report.
The amount of outstanding
revolving debt was $849.8 billion, compared with a revised $849.1 billion
in March, on a seasonally adjusted basis.That's an increase of about 1 percent on an annualized basis.
Total consumer debt, which
adds car loans and student loans to the revolving debt total, was $2.82 trillion, up $11.1 billion for the month, or almost 5 percent, annualized.
While consumers' total debt
load has been driven upward by student loans in recent months, "the credit card picture is
more volatile -- you see ups and downs month after month," said Gregory
Daco, principal U.S. economist at IHS Global Insight.
People's budgets and
expectations were both subject to a swirl of different forces in April. Consumer
confidence was up, according to The Conference Board, rebounding from a decline
in March. "However, consumers' confidence has been challenged several
times over the past few months by such events as the fiscal cliff, the payroll
tax hike and the sequester," Lynn Franco, director of economic indicators,
said in a statement. "Thus, while expectations appear to have bounced
back, it is too soon to tell if confidence is actually on the mend."
While consumer spending picked up slightly, another federal report issued Friday showed the job picture dimming a bit. May's unemployment rate ticked up to 7.6 percent, and
the long-term unemployed made up a smaller fraction of the jobless ranks. The U.S. Labor Department characterized the
change in the rate, and the number unemployed, as little changed.
April personal income was
down slightly from March, the U.S. Commerce Department said, and consumer
spending fell 0.2 percent. However, falling prices -- led by a drop in gas
prices -- meant that incomes in real terms actually increased, adjusting for
Card balances are only
partly the result of consumer behavior, as lenders continue to keep a close eye
on granting credit. "Banks are not as loose as they were before the
[financial] crisis," Daco said. Banks in the first quarter reported easing
standards somewhat for credit card applications, the Federal Reserve's senior loan officer survey found. Consumers' craving for cards was robust, as 18
percent of the bankers surveyed said demand was moderately stronger during the
Households got a boost from
the housing market, where rising home prices are making families feel
wealthier. Median home prices were up 11 percent in April as compared to April
2012, the National Association of Realtors said. Sales of existing homes rose,
despite tight credit conditions and limited availability.
The big question mark
hanging over the outlook is when the Federal Reserve will begin tapering its
program of pumping cash into the economy by buying bonds. Concerns are rising that
the Fed is leaning toward slowing down its bond buying program, a move that
would generally launch interest rates upward again, affecting the rates
cardholders pay on balances. But the economic environment continues to leave
room for stimulus measures, Daco said.
"There's still a lot of
slack in the economy," he said. "When you look at wage growth, it's
very much subdued."
See related: Consumers used plastic less in March
Published: June 7, 2013
Three most recent Research, statistics stories:
- Mobile payment statistics – Mobile payments are taking off, but how high will this technology fly? We sort through the best statistics on the evolving pay-by-phone industry ...
- Complaints data show which cards pay refunds most, least often – A look at 14,000 credit card complaints sent to the federal consumer bureau shows big differences in how cards solve disputes ...
- Gas card survey finds pedestrian rewards – When it comes to rewards, the most venerable of credit cards -- gas-brand cards -- remain stuck in the slow lane, with high APRs and limited paybacks. They remain useful for credit-building or a quick burst of savings ...