2012 Credit Card Debt Study

CardHub-2012-Credit-Card-Debt-StudyAbove all else, 2012 represented a year of cautious optimism in regards to credit card spending and payment habits.  While consumers have yet to fully internalize lessons learned from the Great Recession or adjust to the fact that income levels are no longer being artificially propped up by the housing bubble, each quarter marked an improvement relative to the respective timeframe in 2011.  In other words, our typical first-quarter debt paydown was more pronounced and the subsequent amounts incurred were less significant.

Nevertheless, it is troubling that credit card users have been unable to truly take advantage of record-low charge-off rates and the attractive 0% financing offers they’ve fostered to significantly pay off amounts owed and establish a debt-neutral lifestyle.  We are still headed for the same type of societal overleveraging overload that exacerbated the economic impact of the housing market’s crash; we’re just approaching it at a somewhat slower rate.  If a double-dip recession is to be avoided, greater distinction must be made between necessity and luxury, and strategic budgeting should become the norm rather than the exception.

More information about how the credit card debt landscape changed throughout 2012 as well as how user performance compared to previous years can be found below:

 Year-End Results

By the Numbers:

  • Net Result in Debt Load: + $36,186,894,465
    • Relative to 2011: + 21%
    • Relative to 2010: - 799%
    • Relative to 2009: - 3,509%
  • Outstanding Credit Card Debt: + $3,398,000,000
  • Credit Card Charge-Offs: $32,788,401,465

Commentary:

  • Each quarter of 2012 marked an improvement relative to the corresponding quarter the year before.
  • Consumers used credit far less responsibly in 2012 than in either 2009 or 2010.
  • U.S. consumers have charged-off on nearly a quarter of a trillion dollars in the past four years.
  • The average indebted U.S. household has a credit card balance of nearly $7,000.
  • Card Hub predicts that consumers’ breaking point is only 15-20% higher than current credit card debt levels.

Q1 Main Findings

By the Numbers:

  • Net Result in Debt Load: - $35,160,750,249
    • Relative to Q1 2011: + 6%
    • Relative to Q1 2010: - 10%
    • Relative to Q1 2009: - 22%
  • Outstanding Credit Card Debt: - $43,774,052,000
  • Credit card Charge-Offs: $8,613,301,751

Commentary:

  • Outstanding credit card debt decreased $35.5 billion during Q1 2012
  • Banks charged-off $8.6 billion in credit card debt during the quarter, roughly 37% less than during Q1 2011
  • The average U.S. household has $6,625 in credit card debt.
  • Projection:  U.S. consumers are now expected to add $53.4 billion in credit card debt during 2012.

Q2 Main Findings

By the Numbers:

  • Net Result in Debt Load: + $17,690,193,946
    • Relative to Q2 2011:  - 8%
    • Relative to Q2 2010: + 73%
    • Relative to Q2 2009: + 85%
  • Outstanding Credit Card Debt: + $9,234,422,400
  • Credit Card Charge-Offs: $8,455,771,546

Commentary:

  • On the bright side, we have done a better job paying our credit card bills each of the past two quarters than we did last year, marking the first time since 2009 that we’ve seen two consecutive quarters of improvement relative to the respective quarters the year before
  • While the metrics have indeed been better, you must consider the basis for comparison: 2011 was a bad year for consumer overleveraging, with credit card debt increasing by $46.7 billion during the course of the year, and the fact that we’ve only seen slight improvements this year means we are on a similar track.
  • Over the past year and a half, no quarter has displayed better metrics (consumers either paying down more credit card debt or incurring less) than its respective predecessor from two years prior.
  • The charge-off rate, now at 4.25%, is approaching pre-recession levels, which is one of the main factors prompting credit card companies to begin lending again.
  • Credit card outstandings have decreased $190.5 billion since their December 2008 peak, yet the fact that there were $226 billion in charge-offs during that same timeframe means there has been no net pay down by consumers.
  • The average U.S. household has $6,690 in credit card debt.
  • Projection:  U.S. consumers are now expected to add $43.5 billion in credit card debt during 2012.

Q3 Main Findings

By the Numbers:

  • Net Result in Debt Load: + $13,235,042,128
    • Relative to Q3 2011: - 18%
    • Relative to Q3 2010: + 113%
    • Relative to Q3 2009: + 9%
  • Outstanding Credit Card Debt: + $5,561,647,000
  • Credit card Charge-Offs: $8,045,933,040

Commentary:

  • While credit card debt increased relative to Q2 2012, the $13.2 billion we added to our tab is 18% less than we incurred during the third quarter of 2011.
  • Q3 2012 marks the third consecutive quarter in which consumers have displayed improved credit card performance relative to the respective quarter the year before – the first time that has happened in at least three years.
  • While the pace at which we’re incurring credit card debt is obviously slowing, consumers must reverse course rather than merely head the wrong way slower.
  • Banks charged off on more than $7.6 billion in credit card debt during Q3 2012.
  • At 3.83%, the charge-off rate is lower than it’s been since the second quarter of 2006.
  • The average U.S. household has $6,723 in credit card debt.
  • Projection:  U.S. consumers are now expected to add $36.3 billion in credit card debt during 2012.

Q4 Main Findings

By the Numbers:

  • Net Result in Debt Load: + $40,422,408,640
    • Relative to Q3 2011: - 8%
    • Relative to Q3 2010: + 52%
    • Relative to Q3 2009: + 79%
  • Outstanding Credit Card Debt: + $32,376,475,600
  • Credit Card Charge-Offs: $8,045,933,040

Commentary:

  • While credit card debt increased relative to Q3 2012, the $40.4 billion we added to our tab is 8% less than we incurred during the third quarter of 2011.
  • Q4 2012 marks the third consecutive quarter in which consumers have displayed improved credit card performance relative to the respective quarter the year before – the first time that has happened in at least three years.
  • While the pace at which we’re incurring credit card debt is obviously slowing, consumers must reverse course rather than merely head the wrong way slower.
  • Banks charged off on more than $8 billion in credit card debt during Q3 2012.
  • At 3.86%, the charge-off rate remains lower than it’s been since the second quarter of 2006.
  • The average U.S. household has $6,980 in credit card debt.

Data & Graphs

Net Result of Consumer Credit Card Debt Q1 2009 – Q4 2012

Net Result in Debt Load Relative to Same Period
Last Year
Relative to Same Period Two Years Ago
2012 $36,186,894,465 -21% 799%
2012 Q4 $40,422,408,640 -8% 52%
2012 Q3 $13,235,042,128 -18% 113%
2012 Q2 $17,690,193,946 -8% 73%
2012 Q1 $-35,160,750,249 6% -10%
2011 $45,871,332,261 1,040% 4675%
2011 Q4 $43,801,901,377 65% 94%
2011 Q3 $16,096,515,999 159% 33%
2011 Q2 $19,140,954,722 87% 100%
2011 Q1 $-33,168,039,838 -15% -27%
2010 $4,024,428,502 501%
2010 Q4 $26509885707 18%
2010 Q3 $6,207,943,058 -49%
2010 Q2 $10,229,102,864 7%
2010 Q1 $-38,922,503,127 -14%
2009 $-1,002,696,106
2009 Q4 $22,546,097,501
2009 Q3 $12,138,970,515
2009 Q2 $9,559,638,525
2009 Q1 $-45,247,402,647

Net Result in Debt LoadGreen indicates that consumers decreased their debt relative to the previous quarter. Red indicates they increased their debt relative to the previous quarter.

Relative to Same PeriodGreen indicates that consumers either paid down more debt or accumulated less debt than they did in same quarter in 2011 and 2010. Red indicates that they either paid down less debt or accumulated more debt than they did in the same quarter in 2011 and 2010.

 

Consumer Credit Card Debt and Charge-off Data (in Billions):

Outstanding Revolving Consumer Debt Outstanding Credit Card Debt Quarterly Credit Card Charge-Off Rate Quarterly Credit Card Charge-Off in Dollars
2012 $850.8 $833.8 $32.8
2012 Q4 $850.8 $833.8 3.86% $8
2012 Q3 $817.8 $801.4 3.83% $7.7
2012 Q2 $812.1 $795.8 4.25% $8.5
2012 Q1 $802.7 $786.6 4.38% $8.6
2011 $847.3 $830.4, $45.3
2011 Q4 $847.3 $830.4 4.53% $9.4
2011 Q3 $812.2 $796 5.63% $11.2
2011 Q2 $807.2 $791.1 5.58% $11
2011 Q1 $799 $783 6.96% $13.6
2010 $846.7 $829.8 $77.7
2010 Q4 $846.7 $829.8 7.7% $16
2010 Q3 $836 $819.2 8.55% $17.5
2010 Q2 $847.5 $830.5 10.97% $22.8
2010 Q1 $860.3 $843.1 10.16% $21.4
2009 $921.9 $903.4 $85.6
2009 Q4 $921.9 $903.4 $10.11% $22.8
2009 Q3 $922.2 $903.7 10.1% $22.8
2009 Q2 $933.1 $914.4 9.77% $22.3
2009 Q1 $946.1 $927.2 7.62% $17.7
2008 Q4 $1,010.3 $990.1

 

Average Credit Card Debt per Household

 

 Other Years’ Studies

 * Some of the numbers may differ from study to study as a result of  the Federal Reserve updating certain numbers for several months after first publishing them. For questions or more information regarding this study, please contact our media department.

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