WASHINGTON—A new study shows that U.S. consumers may be headed back to the same credit habits exhibited prior to the Great Recession.
The U.S. entered the fourth quarter of the year fresh off two consecutive quarters in which post-recession records for consumer credit card debt were set. CardHub’s Q3 2015 Credit Card Debt Study reveals that consumers racked up $21.3 billion in new credit card debt from July through September – 34% more than was added to consumers’ tab over the same timeframe last year and the most for the third quarter of the year since 2009.
“Coming on the heels of a $32-billion Q2 build-up, this puts us on pace to end 2015 with a roughly $68.5 billion net increase in credit card debt. If this projection holds true, the average household with credit card debt would ring in the New Year owing more than $8,000 – a threshold that has not been crossed since 2008,” CardHub stated. “This puts us perilously close to a tipping point at which balances become unsustainable and delinquency rates skyrocket.”
Other findings from the report:
- While the fact that consumers incurred less new credit card debt in the third quarter of 2015 than in the second might lead some to believe that credit responsibility is improving, this mirrors a historical trend where a first-quarter paydown is followed by a spike in debt levels during the second quarter, a more-modest increase during the third quarter, and a relatively massive buildup to end the year, CardHub said.
- The $21.3 billion in new credit card debt that added to consumers’ tab in Q3 2015 is the largest third-quarter buildup since the Great Recession – 71% higher than the post-recession average.
- With eight of the past 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, CardHub said.
- While credit card debt levels are trending significantly upward, charge-off rates remain near historical lows and are, in fact, down on a year-over-year basis. “Something clearly has to give, and it does not seem to be our spending habits,” CardHub said.