2009 Credit Card Debt Study

CardHub-2009-Credit-Card-Debt-StudyDespite it being the worst year of the Great Recession, U.S. consumers were actually able to pay off roughly $11.6 billion in credit card debt during 2009, as concerns over the country’s uncertain economic outlook led to widespread scrimping and dramatic reductions in retail spending.  Unfortunately, the 2009 credit card debt reduction was not quite as significant as many media reports would lead you to believe.  The confusion among quoted statistics derives from the fact that most mainstream analysts forget to include charged-off debt in their final numbers.  In other words, they report the amount by which outstanding credit card debt fell during the year ($93.2 billion) without factoring in the amount that banks were required to write off their books ($81.6 billion), which consumers still owe and issuers or collection agency proxies will still try to recoup.

The fact that credit card users ended the year having paid off only $11.6 billion in debt may also strike you as a letdown, considering that we paid off $47.2 billion in amounts owed during Q1 alone.  However, it’s actually quite normal for consumers to erase much of a first-quarter paydown with three subsequent quarters of debt increases, as the first quarter of the year is when people tend to get annual salary bonuses and tax refunds (which augments their disposable income) and the rest of the year contains a number of major shopping holidays (e.g. Christmas, Black Friday, and back-to-school season).

More information about how credit card debt levels changed with each passing quarter in 2012 can be found below.

Year-End Results

By the Numbers:

  • Net Result in Debt Load: - $11,595,115,000
  • Outstanding Credit Card Debt: - $93,198,000,000
  • Credit Card Charge-Offs: $81,602,885,000

Commentary:

One might look at the $93 billion decline in credit card debt, and come to the conclusion that Americans paid down their balances in a big way. The reality is that $81.6 billion of the $93 billion decrease is the direct result of Americans defaulting on their debt. The real decrease in credit card debt is only $11.6 billion, the majority of which is due to a major decline in Q1 of 2009. After Q1 2009, Americans accumulated more and more credit card debt.

Q1 Main Findings

By the Numbers:

  • Net Result in Debt Load: - $47,246,912,300
  • Outstanding Credit Card Debt: - $64,484,000,000
  • Credit Card Charge-Offs: $17,237,087,700

Commentary:

Consumers paid down their credit card debt in a big way! Consumers actually paid down around $47.2 billion of credit card debt.

Q2 Main Findings

By the Numbers:

  • Net Result in Debt Load: + $3,929,319,800
  • Outstanding Credit Card Debt: - $17,738,000,000
  • Credit Card Charge-Offs: $21,667,319,800

Commentary:

Consumers accumulated more credit card debt in Q2 than Q1 2009, given that the drop in outstandings is smaller than the dollar amount that was charged-off.

Q3 Main Findings

By the Numbers:

  • Net Result in Debt Load: + $10,643,657,500
  • Outstanding Credit Card Debt: - $11,466,000,000
  • Credit Card Charge-Offs: $22,109,657,500

Commentary:

Consumers accumulated more credit card debt in Q3 than Q2 2009, given that the drop in outstandings is smaller than the dollar amount that was charged-off.

Q4 Main Findings

By the Numbers:

  • Net Result in Debt Load: + $21,078,820,000
  • Outstanding Credit Card Debt: + $490,000,000
  • Credit Card Charge-Offs: $20,588,820,000

Commentary:

In Q4 of 2009, outstanding credit card debt went up by over $21 Billion, when the $20.6 billion write-off is considered.

Data & Graphs

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
2009 $894.0 $876.1 $81.6
Q4 2009 $894.0 $876.1 9.4% $20.6
Q3 2009 $893.5 $875.6 10.1% $22.1
Q2 2009 $905.2 $887.1 9.77% $21.6
Q1 2009 $923.3 $904.8 7.62% $17.2
Q4 2008 $989.1 $969.3

(Source: CardHub.com, Federal Reserve)

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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