Research and Statistics

3 in 10 cardholders pay their balances in full each month, banks say


Three in 10 cardholders pay their balances in full each month, according to new data from the American Bankers’ Association. It’s the highest level since the group began tracking that data since 2008.

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The share of cardholders who pay their balances in full each month has reached a new high, according to data from the American Bankers Association (ABA).

ABA said in its latest Credit Card Market Monitor the share of transactors – card users who pay their balances in full each month – ticked up by 1 percentage point to 30.4 percent in the second quarter of 2018. The share of consumers who revolve balances each month fell by 1 percent to 43.8 percent.

ABA said the percentage of transactors relative to revolvers and dormant accounts is the highest since it began tracking that data back in 2008.

Paying card balances off in full is perhaps more critical to consumers than ever before, given that average card APRs recently surpassed 17 percent. That means even new cardholders with high credit ratings could be subject to high interest rates that were once reserved for riskier borrowers. And card APRs are set to rise even more in the near future as the Federal Reserve continues to normalize interest rates.

Card balances rose but remain relatively low versus income

Card debt outstanding as a share of disposable income ticked up slightly to 5.36 percent in the second quarter, but it remains more than 2 percentage points below recession-era levels.

“Consumers continue to keep credit card balances low relative to income, and are managing their credit cards prudently,” Jess Sharp, executive director of ABA’s Card Policy Council, said in a news release.

ABA said super-prime accounts rose by 9.2 percent year-over-year, and accounts for prime customers grew by 6.6 percent – both record highs. Subprime accounts grew only by 3 percent.

See related: Credit card billing cycles: How long can they be? 

“Consumers continue to keep credit card balances low relative to income, and are managing their credit cards prudently.”

Card issuers show restraint extending credit to potentially risky consumers

While accounts are on the rise, card issuers are showing a bit of restraint with regard to the amount of credit they extend customers in various risk tiers. Average credit lines dropped for both new prime (0.4 percent) and subprime (1.3 percent) borrowers for the first time in a year, while super-prime cardholders’ credit limits rose 0.2 percent.

“A strong economy, along with high confidence levels bolstered by more jobs and higher wages, continues to support healthy consumer spending,” Sharp said. “The industry continues its diligent approach to credit underwriting, which is reflected most recently in declines in average credit lines for prime and subprime borrowers.”

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