US Credit Card Balances Declining

The latest data from credit reporter Equifax shows that US consumer credit balances have fallen significantly since July 2010. The company reported the following trends:

• Bank credit card write-offs peaked at nearly 13% in July 2010 and retail credit card write-offs peaked at more than 14% in July 2010.
• Bank credit card write-offs currently stand at 5.53% (39% lower than 2010 levels) and retail credit card write-offs are at 8.4% (representing a 26% decline over 2010 levels).
• Cumulative revolving card balances peaked in October 2008 at more than $752 billion, and despite a recent uptick attributable to seasonal purchase activity, have since declined by almost 20% (December 2011 cumulative revolving card balances stand at $604 billion).
• Total consumer debt outstanding (which includes First Mortgage, Home Equity, Consumer Finance, Auto, Student Loan, Retail Credit Card and Bank Credit Card) also peaked in October 2008 at $12.4 trillion, and in December 2011, U.S. consumers carried $11.1 trillion in total consumer debt, representing a decrease of more than 10%.

An Equifax official also noted:

The industry is experiencing sustained improvement in consumers’ payment behavior and overall reduction of debt, a trend that seems to indicate more responsible lending and borrowing habits among card issuers and consumers alike.

The Equifax data appears to be roughly in-line with the report on consumer credit released earlier this week by the Federal Reserve.