Research and Statistics

Fed’s G.19 report shows card debt rose slightly in July


Credit card balances increased in July, according to new figures released by federal banking regulators. That slight uptick is due to the fact that economic woes are making it more difficult for cardholders to pay off existing balances, according to analysts.

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Credit card balances increased in July, according to new figures released by federal banking regulators. That uptick may be partially due to the fact that economic woes are making it more difficult for cardholders to pay off existing balances, according to analysts.

The Federal Reserve’s latest G.19 report shows revolving credit — of which about 98 percent is comprised of credit card debt — rose at an annual rate of 4.8 percent in July. With the latest increase, revolving credit advanced to $969.9 billion from $966 billion the month before.

Overall consumer credit (revolving and nonrevolving) rose at a smaller-than-expected pace of 2.1 percent in July to $2.587 trillion, following an increase of 5.1 percent the prior month. June’s rise was previously estimated at 6.7 percent.

Against a backdrop of rising unemployment and storms on the East Coast, use of credit cards has “moderated, but continues to grow,” says Tower Group research director Dennis Moroney. Consumers are also slower to pay credit card bills. The latest advance may also represent “old sales that are revolving,” he says. “When the monthly payment comes around, they’re paying less of it.”

While some reliance on credit cards may be due to rising gas prices, increasing charges may also signal rebounding consumer confidence. “Accessing credit is a very optimistic thing,” says Elizabeth Rowe, director of banking advisory services with Mercator Advisory Group in Maynard, Mass. Consumers’ belief that they will be able to repay their bank suggests a belief that “tomorrow is at least as good as today,” Rowe says.

According to Rowe, the election season may play a part in consumer optimism. “People keep talking to us about solutions, she says. With politicians pleding to use their ideas, energies and abilities to fix things, Rowe asks, “What if that were true?”

Another factor may also be at work: “I think there is a little bit of credit-crunch fatigue,” says Susan Menke, senior financial services analyst with Mintel International in Chicago. “I think people are slowing down, I just don’t think they’re going to stop,” Menke says. “They’re still making some discretionary purchases.”

Despite potential optimism, it may be a little while before consumers start really exercising their credit cards again, Rowe says. “I don’t think it’s really going to happen until 2009,” she says. Menke sees a possible increase coming sooner. “I think the worst of it is over and with gas prices coming back down some, I wouldn’t be surprised if these numbers didn’t jump up some over the next few months,” she says.

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Credit Card Rate Report Updated: August 5th, 2020
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