Ad Disclosure

2016 Credit Card Debt Study: Trends & Insights

credit-card-debt-ch
With the global economy in flux and debate raging over the timing of Federal Reserve rate hikes, data that speaks to the financial health of the average American household can be quite telling. Credit card debt statistics, in particular, reflect consumer sentiment and can foretell overleveraging bubbles that may trigger constriction across lending markets.

It is with that context that some might view the fact that U.S. households paid down roughly $26.8 billion in credit card debt during the first quarter of 2016 as decidedly good news. But it’s not. Not only does this paydown come on the heels of a year in which we added an astounding $71 billion to our tab, but it’s also the smallest first-quarter debt reduction since 2008.

As a result, CardHub is projecting that we’ll end 2016 with roughly $1 trillion in outstanding balances for the first time ever, which would bring the amount owed by the average indebted household to more than $8,500. You therefore have to wonder how long we can keep this up.

Main Findings

 
Q1 2016 By The Numbers:

  • Change in Outstanding Credit Card Debt: -$33,753,620,600
  • Credit Card Charge-Offs: $6,994,395,551
  • Net Result in Debt Load: -$26,759,225,049.34
    • Relative to Q1 2015: -23%
    • Relative to Q1 2014: -17%
    • Relative to Q1 2013: -18%
    • Relative to Q1 2012: -22%
    • Relative to Q1 2011: -18%
    • Relative to Q1 2010: -30%
    • Relative to Q1 2009: -160%

  • We paid off $26.8 billion in credit card debt during the first three months of 2016, which isn’t as good as you might think, considering that it’s the smallest first-quarter paydown since 2008 and nearly 25% below the post-recession average.
  • This first-quarter pay down covers just 38% of the $71 billion we added to our tab in 2015.
  • With 8 of the last 10 quarters reflecting year-over-year regression in consumer performance, evidence is mounting to support the notion that credit card users are reverting to pre-downturn bad habits.
  • Although the average indebted household’s balance dipped to $7,597 during the first quarter, this still represents a 6% increase relative to Q1 2015. It’s also just $831 below the tipping point CardHub identified as being unsustainable.
  • Despite credit card debt levels trending significantly upward, charge-off rates remain near historical lows. Something clearly has to give, and it does not seem to be our spending habits.
  • The first quarter of 2016 shares a lot of similarities with Q1 2007, including the pay-down amount, its size in relation to the previous quarter’s build-up and the charge-off rate at the time. That is not good news for consumers, considering the financial turmoil that followed the last time around.

 

Data & Graphs

Please note that figures listed in the Main Findings section of a particular quarter won’t always match those in the Data & Graphs section of this report, as the Federal Reserve regularly updates historical data with new research. Figures included in each Main Findings section reflect the information that was available at the time of that quarterly study being conducted, while the Data & Graphs section reflects the most recent data available.

Net Result of Consumer Credit Card Debt Q1 2008 – Q1 2016

Net Result in Debt Load Relative to Same Period
Last Year
Relative to Same Period Two Years Ago
2016 Q1 -$26,759,225,049 -23% -17%
2015 $70,958,274,558 24% 77%
2015 Q4 $52,409,640,735 14% 21%
2015 Q3 $21,297,867,838 34% 76%
2015 Q2 $32,020,282,257 14% 86%
2015 Q1 -$34,769,624,295 7% 7%
2014 $57,429,955,493 43% 58%
2014 Q4 $45,934,983,817 6% 14%
2014 Q3 $15,888,180,012 31% 25%
2014 Q2 $28,143,312,464 64% 59%
2014 Q1 -$32,536,520,800 0.4% -5%
2013 $40,126,407,973 10% -14%
2013 Q4 $43,242,227,749 7% -1%
2013 Q3 $12,087,752,777 -5% -25%
2013 Q2 $17,205,458,114 -3% -11%
2013 Q1 -$$32,409,148,823 -5% -0.8%
2012 $36,451,406,956 -22% 1,401%
2012 Q4 $40,324,722,087 -8% 57%
2012 Q3 $12,689,320,555 -21% 129%
2012 Q2 $17,701,582,851 -8% 84%
2012 Q1 -$34,264,218,536 5% -11%
2011 $46,632,170,869 1,820% 5,427%
2011 Q4 $43,860,321,843 70% 95%
2011 Q3 $16,154,372,027 191% 35%
2011 Q2 $19,279,517,221 101% 104%
2011 Q1 -$32,662,040,223 -15% -27%
2010 $2,473,689,486 391% -96%
2010 Q4 $25,738,332,310 14% -29%
2010 Q3 $5,558,050,211 -54% -59%
2010 Q2 $9,609,620,560 2% -59%
2010 Q1 -$38,432,313,595 -14% 123%
2009 -$850,556,850 102% 302%
2009 Q4 $22,493,335,633 -38% -65%
2009 Q3 $12,007,388,079 -12% -69%
2009 Q2 $9,416,624,804 -60% -71%
2009 Q1 -$44,767,905,366 159% 104%
2008 $56,171,073,844 -50% -42%
2008 Q4 $36,133,211,157 -44% -34%
2008 Q3 $13,716,647,195 -64% -46%
2008 Q2 $23,574,779,971 -26% -5%
2008 Q1 -$17,253,564,479 -21% 106%

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 the previous two years. Red indicates that they either paid down less debt or accumulated more debt than they did in the same quarter in the previous two years.

Annual Net Result of Consumer Credit Card Debt 1986 – 2015:

Annual Debt Load Increase/Decrease

 

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

Total Outstanding Credit Card Debt Change in Outstanding Credit Card Debt Quarterly Credit Card Charge-Off in Dollars Net Result in Debt Load
2016 Q1 $885.4 -$33.7 $7 -$26.8
2015 $919.1 $25.5 $71
2015 Q4 $919.1 $45.6 $6.7 $52.3
2015 Q3 $873.5 $15.3 $6 $21.3
2015 Q2 $858.2 $25.7 $6.5 $32.2
2015 Q1 $832.5 -$41.2 $6.3 -$34.9
2014 $873.7 $26.3 $59.4
2014 Q4 $873.7 $39.9 $6.5 $46.4
2014 Q3 $833.8 $10.4 $6 $16.4
2014 Q2 $823.4 $21.6 $7.1 $28.7
2014 Q1 $801.8 -$38.7 $6.7 -$32.0
2013 $840.5 $28.1 $39.8
2013 Q4 $840.5 $36.1 $7 $43.1
2013 Q3 $804.4 $5.6 $6.4 $12.0
2013 Q2 $798.8 $9.9 $7.2 $17.2
2013 Q1 $788.9 -$39.9 $7.5 -$32.5
2012 $828.8 $31.9 $36
2012 Q4 $828.8 $32.3 $7.8 $40.2
2012 Q3 $796.5 $5.2 $7.4 $12.6
2012 Q2 $791.3 $9.4 $8.2 $17.6
2012 Q1 $781.9 -$42.8 $8.4 -$34.4
2011 $824.7 $44.9 $47
2011 Q4 $824.7 $34.6 $9.3 $43.9
2011 Q3 $790.1 $5.1 $11.1 $16.2
2011 Q2 $785 $8.4 $11 $19.4
2011 Q1 $776.6 -$46.0 $13.5 -$32.6
2010 $822.6 $77.8 $2.5
2010 Q4 $822.6 $9.9 $15.8 $25.7
2010 Q3 $812.7 -$11.9 $17.4 $5.6
2010 Q2 $824.6 -$13.0 $22.6 $9.6
2010 Q1 $837.6 -$60.4 $22 -$38.4
2009 $898 $85.3 $-0.9
2009 Q4 $898 -$0.4 $22.9 $22.5
2009 Q3 $898.4 -$10.6 $22.7 $12.0
2009 Q2 $909 -$12.8 $22.2 $9.4
2009 Q1 $921.8 -$62.4 $17.6 -$44.8
2008 $984.2 $53.9 $56.2
2008 Q4 $984.2 $20.7 $15.5 $36.1
2008 Q3 $963.5 -$0.3 $14 $13.7
2008 Q2 $963.8 $10.4 $13.2 $23.6
2008 Q1 $953.4 -$28.4 $11.2 -$17.3
2007 $981.8 $36.7 $113.1
2007 Q4 $981.8 $54.4 $10.3 $64.7
2007 Q3 $927.4 $29.2 $9.2 $38.3
2007 Q2 $898.2 $23.3 $8.6 $31.9
2007 Q1 $874.9 -$30.5 $8.6 -$21.9
2006 $905.4 $30.3 $96.2
2006 Q4 $905.4 $46.4 $8.2 $54.6
2006 Q3 $859 $17.0 $8.3 $25.3
2006 Q2 $842 $17.3 $7.4 $24.7
2006 Q1 $824.7 -$14.8 $6.4 -$8.4
2005 $839.5 $38.9 $70.6
2005 Q4 $839.5 $37.2 $12.7 -$21.0
2005 Q3 $802.3 $10.6 $8.7 $22.3
2005 Q2 $791.7 $13.7 $8.6 $19.3
2005 Q1 $778 -$29.9 $8.9 $49.9
2004 $807.9 $38.4 $71.7
2004 Q4 $807.9 $31.0 $9.5 -$11.2
2004 Q3 $776.9 $18.1 $8.5 $15.8
2004 Q2 $758.8 $5.6 $10.2 $26.6
2004 Q1 $753.2 -$21.4 $10.1 $40.6
2003 $774.6 $43.8 $61.7
2003 Q4 $774.6 $25.2 $11.8 -$10.4
2003 Q3 $749.4 $5.3 $10.1 $19.8
2003 Q2 $744.1 $8.5 $11.3 $15.4
2003 Q1 $735.6 -$21.1 $10.6 $36.9
2002 $756.7 $46.2 $82.5
2002 Q4 $756.7 $30.1 $10.7 -$9.6
2002 Q3 $726.6 $12.0 $10.8 $28.6
2002 Q2 $714.6 $17.4 $11.2 $22.7
2002 Q1 $697.2 -$23.2 $13.6 $40.8
2001 $720.4 $37.7 $69.9
2001 Q4 $720.4 $29.5 $11.6 $0.1
2001 Q3 $690.9 -$3.9 $9 $23.7
2001 Q2 $694.8 $14.5 $9.1 $5.1
2001 Q1 $680.3 -$7.9 $8 $41.0
2000 $688.2 $28.6 $101.9
2000 Q4 $688.2 $43.4 $8.1 -$3.4
2000 Q3 $644.8 $20.6 $6.9 $26.3
2000 Q2 $624.2 $19.7 $6.5 $27.5
2000 Q1 $604.5 -$10.4 $7 $51.5
1999 $614.9 $27 $56.3
1999 Q4 $614.9 $22.9 $7.1 -$10.8
1999 Q3 $592 $10.9 $6.5 $19.7
1999 Q2 $581.1 $13.4 $6.3 $17.4
1999 Q1 $567.7 -$18.0 $7.1 $30.0
1998 $585.7 $29.1 $70.4
1998 Q4 $585.7 $29.9 $7.7 -$12.8
1998 Q3 $555.8 $7.1 $7.3 $31.1
1998 Q2 $548.7 $23.9 $7.2 $14.4
1998 Q1 $524.8 -$19.6 $6.9 $37.7
1997 $544.4 $27.3 $57.8
1997 Q4 $544.4 $27.3 $7.5 -$12.3
1997 Q3 $517.1 $13.5 $6.9 $14.8
1997 Q2 $503.6 $8.0 $6.8 $20.4
1997 Q1 $495.6 -$18.3 $6.1 $34.8
1996 $513.9 $21.3 $79.6
1996 Q4 $513.9 $38.9 $6.1 -$3.9
1996 Q3 $475 $12.7 $5.3 $20.5
1996 Q2 $462.3 $15.2 $5.2 $18.0
1996 Q1 $447.1 -$8.5 $4.7 $45.0
1995 $455.6 $14.4 $94.5
1995 Q4 $455.6 $37.1 $4.6 $1.2
1995 Q3 $418.5 $24.8 $3.8 $23.1
1995 Q2 $393.7 $19.8 $3.3 $28.6
1995 Q1 $373.9 -$1.6 $2.7 $41.7
1994 $375.5 $10.5 $67.5
1994 Q4 $375.5 $33.8 $2.9 -$5.9
1994 Q3 $341.7 $17.1 $2.5 $17.0
1994 Q2 $324.6 $14.5 $2.5 $19.5
1994 Q1 $310.1 -$8.4 $2.6 $36.8
1993 $318.5 $11 $43.1
1993 Q4 $318.5 $26.2 $2.7 -$7.5
1993 Q3 $292.3 $11.2 $2.6 $7.9
1993 Q2 $281.1 $5.0 $2.9 $13.8
1993 Q1 $276.1 -$10.3 $2.8 $28.9
1992 $286.4 $12.6 $27.4
1992 Q4 $286.4 $19.7 $3.3 -$9.9
1992 Q3 $266.7 $4.2 $2.9 $7.2
1992 Q2 $262.5 $4.0 $3.2 $7.1
1992 Q1 $258.5 -$13.0 $3.2 $23.0
1991 $271.5 $11.5 $37.2
1991 Q4 $271.5 $18.9 $3.2 -$4.4
1991 Q3 $252.6 $7.9 $3 $8.5
1991 Q2 $244.7 $5.7 $2.9 $10.9
1991 Q1 $239 -$6.9 $2.5 $22.1
1990 $245.9 $7.8 $35.9
1990 Q4 $245.9 $16.9 $2.4 -$5.6
1990 Q3 $229 $10.0 $2 $10.2
1990 Q2 $219 $8.4 $1.8 $11.9
1990 Q1 $210.6 -$7.2 $1.6 $19.3
1989 $217.8 $6.3 $33.6
1989 Q4 $217.8 $19.8 $1.8 -$4.4
1989 Q3 $198 $6.0 $1.5 $8.8
1989 Q2 $192 $7.3 $1.5 $7.6
1989 Q1 $184.7 -$5.9 $1.4 $21.6
1988 $190.6 $5.7 $30
1988 Q4 $190.6 $17.8 $1.6 -$2.9
1988 Q3 $172.8 $4.9 $1.4 $7.3
1988 Q2 $167.9 $5.8 $1.4 $6.3
1988 Q1 $162.1 -$4.1 $1.3 $19.3
1987 $166.2 $5 $25.4
1987 Q4 $166.2 $13.9 $1.4 -$6.2
1987 Q3 $152.3 $6.8 $1.2 $8.2
1987 Q2 $145.5 $7.0 $1.2 $8.0
1987 Q1 $138.5 -$7.4 $1.2 $15.4
1986 $145.9 $4.5 $21.5
1986 Q4 $145.9 $12.4 $1.3 -$1.8
1986 Q3 $133.5 $3.1 $1.1 $5.4
1986 Q2 $130.4 $4.3 $1.1 $4.3
1986 Q1 $126.1 -$2.8 $1 $13.6

Quarterly Credit Card Charge-Off in Dollars

Average Credit Card Debt per Household

Tips for Managing Debt

 

  1. Make a Budget (and Stick to It): It’s difficult to spend within reason or plan savings without knowing how your monthly spending compares to your take-home as well as what it is allotted to. That is why you should rank order your expenses – including debt payments, emergency fund contributions, and other savings – and trim the fat if necessary. And most importantly, once you develop your budget, make sure to stick to it or else you’ll have simply wasted your time.
  2. Build an Emergency Fund: With a robust financial safety net, you’ll be less at the mercy of the economy and able to withstand a prolonged period of joblessness, should the need arise. Your goal should be to gradually save about a year’s worth of after-tax income through monthly contributions to an emergency account.
  3. Improve Your Credit: This might sound a bit counterintuitive, considering that increased access to credit provides more opportunity to incur debt, but improving your credit standing will have a dramatic impact on the cost of your debt and, thus, how quickly you can pay it off. Better credit can also make it easier to find a job or a place to live – both of which impact your bottom line.

    You can determine your starting point and get personalized advice by signing up for our sister site WalletHub, which provides free credit scores, full credit reports and various other helpful tools.

  4. Try the Island Approach: The Island Approach is a credit card strategy that involves using different cards for different types of transactions, as if they are a chain of distinct yet interrelated islands. For example, you could transfer your existing debt to a 0% credit card in order to reduce your monthly payments as well as get out of debt sooner and subsidize your ongoing spending with a rewards card or two that offer high earning rates in your biggest expense categories. This will enable you to get the best possible collection of terms as well as gain a better perspective on your spending and payment habits since finance charges on your everyday spending cards will signal a need to cut back.
  5. Use the Snowball Method to Strategically Pay Off Amounts Owed: In order to become debt free at the least possible cost, you should attribute the majority of your monthly debt payment to the balance with the highest interest rate while making the minimum payment required on the rest. Once your most expensive debt is paid off, repeat the process as necessary with the remaining balances.
  6. Evaluate Your Job Situation: In some cases, all the budgeting and planning in the world won’t be enough to solve your debt problems. You may therefore need to evaluate whether there are higher-paying opportunities out there for people with your background or if you’ll need to acquire some new skills in order to make yourself more marketable. This might require making a bit of an investment in yourself, but as long as you get a worthwhile return it’s money well spent.

Raw Data

 

Net Result in Debt Load Relative to Same PeriodLast Year Relative to Same Period Two Years Ago Relative to Same Period Three Years Ago Relative to Same Period Four Years Ago Relative to Same Period Five Years Ago Relative to Same Period Six Years Ago
2015 $70,958,274,558 24% 77% 95% 52% 2822% 8006%
2015 Q4 $52,409,640,735 14% 21% 30% 19% 104% 133%
2015 Q3 $21,297,897,103 34% 76% 68% 32% 284% 77%
2015 Q2 $32,020,282,257 14% 86% 81% 66% 233% 239%
2015 Q1 -$34,769,624,295 7% 7% 1% 6% -10% -22%
2014 $57,429,955,493 43% 58% 23% 2,265% 6,661% N/A
2014 Q4 $45,934,983,817 6% 14% 5% 78% 104% N/A
2014 Q3 $15,888,180,012 31% 25% -2% 186% 32% N/A
2014 Q2 $28,143,312,464 64% 59% 46% 193% 198% N/A
2014 Q1 -$32,536,520,800 0.4% -5% -0.4% -15% -27% N/A
2013 $40,126,407,973 10% -14% 1,552% 4,684% N/A N/A
2013 Q4 $43,242,227,749 7% -1% 68% 92% N/A N/A
2013 Q3 $12,087,752,777 -5% -25% 118% 1% N/A N/A
2013 Q2 $17,205,458,114 -3% -11% 79% 82% N/A N/A
2013 Q1 -$32,409,030,667 -5% 0.8% -16% -28% N/A N/A
2012 $36,451,406,956 -22% 1,401% 4,064% N/A N/A N/A
2012 Q4 $40,324,722,087 -8% 57% 79% N/A N/A N/A
2012 Q3 $12,689,320,555 -21% 129% 6% N/A N/A N/A
2012 Q2 $17,701,582,851 -8% 84% 87% N/A N/A N/A
2012 Q1 -$34,264,218,536 5% -11% -24% N/A N/A N/A
2011 $46,632,170,869 1,820% 5,427% N/A N/A N/A N/A
2011 Q4 $43,860,321,843 70% 95% N/A N/A N/A N/A
2011 Q3 $16,154,372,027 191% 35% N/A N/A N/A N/A
2011 Q2 $19,279,517,221 101% 104% N/A N/A N/A N/A
2011 Q1 -$32,662,040,223 -15% -27% N/A N/A N/A N/A
2010 $2,428,566,422 377% N/A N/A N/A N/A N/A
2010 Q4 $25,746,466,555 14% N/A N/A N/A N/A N/A
2010 Q3 $5,549,815,531 -54% N/A N/A N/A N/A N/A
2010 Q2 $9,611,062,255 2% N/A N/A N/A N/A N/A
2010 Q1 -$38,478,777,918 -14% N/A N/A N/A N/A N/A
2009 -$875,371,613 N/A N/A N/A N/A N/A N/A
2009 Q4 $22,498,812,887 N/A N/A N/A N/A N/A N/A
2009 Q3 $12,005,705,700 N/A N/A N/A N/A N/A N/A
2009 Q2 $9,449,012,767 N/A N/A N/A N/A N/A N/A
2009 Q1 -$44,828,902,967 N/A N/A N/A N/A N/A N/A

* 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.

Editorial Disclaimer: Editorial content is not provided or commissioned by financial institutions. Opinions expressed here are the author’s alone and have not been approved or otherwise endorsed by any financial institution, including those that are CardHub advertising partners. Our content is intended for general educational purposes and should not be relied upon as the sole basis for managing your finances. Furthermore, the materials on this website do not constitute legal advice and should not be relied upon as such. Please let us know if you have any questions or suggestions.

Ad Disclosure: Offers originating from paying advertisers are noted as “Sponsored” on the offer's details page. Advertising may impact how and where offers appear on this site (including, for example, the order in which they appear). At CardHub we try to list as many offers as possible but we don't make any representation of listing all available offers.

Previous 2016 Discover Secured Credit Card Review – CardHub      
DISCUSSION