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Consumers’ payoff habits differ between general purpose, retail cards

CPFB data show payoff rate on store credit cards is half that of general purpose cards


While many credit cardholders own both general purpose and retail store cards, there can be a stark difference in how they pay off the two different card types.

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In its recent annual report to Congress on the U.S. credit card market, the Consumer Financial Protection Bureau (CFPB) presented data on the monthly payoff rates for general purpose and private store cards, as well as the average size of payments that cardholders make on these card types.

What the data illustrate is how widely repayment behaviors diverge between the two types of cards, with cardholders making much more effort to pay off their general purpose cards, while letting retail card balances languish much longer.

Specifically, the share of general card accounts being regularly paid off each month has been at least 35% since 2015, and has been generally increasing, with a large jump to over 40% in 2020.

In stark contrast, the share of retail store cards that get fully paid off each month was just 28% in 2015, and has been dropping ever since. By 2020, only 21.4% of retail card accounts were seeing regular payoffs, meaning the payoff rate on store cards is only about half that of general purpose cards.

The CFPB’s report also shows the size of payments, as a percentage of total balance, is much higher on general cards, and has been rising. In 2020, the average payment on a general purpose card had climbed to almost 32% of the total owed.

For retail store accounts, however, cardholders have only been paying 12.7% to 14.4% of their balance every year from 2015-2020.

General purpose cards make up the lion’s share of the U.S. consumer credit card market. The boosted payments being made on those accounts in 2020, as well the increased number of general card accounts being paid in full each month, aligns with the overall data we’ve seen regarding the plunge in total credit card debt in 2020.

As presented in the CFPB report using inflation-adjusted figures, total U.S. credit card debt had climbed to $939 billion in the last quarter of 2019, the last pre-pandemic quarter. But as a result of the financial impacts of COVID-19, card debt plunged by almost 14% by the third quarter of 2020, to $810 billion, which is about the same level last seen in 2016.

The CFPB’s “2021 Consumer Credit Card Market” report to Congress was released in early October.

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