Consumers drastically cut credit card debt
Credit card balances down 28% since 2009
Consumers have paid down credit card balances at an impressive clip in the past three years, according to recent data from Equifax.
According to Equifax’s National Consumer Credit Trends Report from May 2012, credit card balances on existing bank credit cards – which topped $730 billion in January 2009 – dropped to $531 billion in April 2012. This represents a 28 percent drop in under three-and-a-half years.
In addition, available credit for retail credit cards rose $5 billion in April 2012. This increase comes after available credit for retail credit cards hit bottom in the latter part of 2011.
“The combination of increased available credit and more timely payments among card borrowers has led to the recent growth in card lending,” Amy Crews Cutts, Equifax Chief Economist, said in a statement.
Along with positive signs in the areas of credit card debt levels and credit limit increases, the data was positive for new credit card accounts, as well.
In February 2012, the number of new bank credit cards issued to consumers rose 37 percent on a yearly basis. Also, the average credit limit for the new credit cards issued in February 2012 was $4784 – a 17 percent increase from the $4008 mark seen one year earlier in February 2011.
“Consumers are starting to respond to increased credit availability both in cards and other tradelines, a signal of both their financial confidence and improving economic conditions,” Cutts said. In turn, this increased consumer credit activity bodes well for U.S. economic growth through the second half of 2012.”
Over two years – from April 2010 to April 2012, credit-card write-offs by banks dropped by more than half – from 13.2 percent to less than 6 percent, Equifax said.