Throughout 2019, the average consumer’s credit card spending has steadily increased. And with predictions that balances will continue to get bigger, there are concerns that many people will struggle to make their full payments.
A report by CompareCards.com that tracks credit card spending and payments has found that consumers are paying their full balance less often than in previous years.
The report notes that this type of statistic isn’t necessarily a bad thing; but there are other signs that consumers are less confident in the economy. In a survey, many said that they didn’t think their balance would return to zero any time soon.
Matt Schulz, chief industry analyst at CompareCards says: “We’re starting to see signs that the nation’s $1 trillion credit card debt is finally taking a toll on cardholders’ confidence. This isn’t a full-blown crisis, by any stretch, but it doesn’t seem to be a one-month blip either.”
Cardholder confidence has been dropping and CompareCards has been watching this trend, which is particularly strong in millennials – only 13% from this age group said they were able to pay their full balance every month.
For large purchases, credit cards can be useful if the individual pays their bill in full. Credit cards offer interest free borrowing for the first 30 days, so if you pay the full bill by the end of the month, you are effectively using the lender’s money for free.
However, CompareCards found that 21% of cardholders say they never pay their full bill and only 30% said they always do. This is the lowest figure in a year.
According to statistics from the Census Bureau and the Federal Reserve, in the US, the average person’s credit card debt is $5,700. And because credit cards tend to have high interest rates, this type of debt can be very costly in the long run.
The decrease in confidence and in consumers being able to pay their balance is a worrying trend, and it’s unclear whether this will continue in the coming year.