WASHINGTON—Despite low economic growth late last year, consumers closed out 2015 with credit card debt rising at the fastest pace in more than seven years, new data indicates.
Consumer credit outstanding, which includes all consumer borrowing outside of mortgages, rose by annualized $21.27 billion in December to $3.55 trillion, according to Federal Reserve data. Economists had expected $16.5 billion.
Revolving credit, which is mostly credit card debt, rose by $5.84 billion after rising $6.36 billion in November. Year over year, revolving credit rose 5.1%, the fastest gain since October 2008, when the financial crisis was at its peak, the Federal Reserve data shows.
“The growth in revolving credit could mean a couple things,” Bill Hardekopf, CEO at LowCards.com, Birmingham, Ala., told CUToday.info. “It may be that issuers could be loosening their credit standards, giving some people with lower credit scores access to credit cards. Or it could also mean that consumers are carrying higher balances on their cards. What we need to watch are the credit card delinquency and default rates. If they start to rise significantly, this would be a signal that consumers cannot handle this new credit card debt. That would be a very concerning sign.”