Card Balances Continue to Slow Into the Holidays

During the holiday spending month of November consumers managed to keep their credit card balances growing at half the pace of a year earlier, according to a Fed report released Thursday.

The Fed’s G-19 Consumer Credit Report showed credit unions held $65.1 billion in credit card debt on Nov. 30, up 6.1% from a year earlier. That’s down from a 12-month gain of 8.2% for November 2018 and 9.2% for November 2017.

While credit unions performed far better than banks, both showed the same pattern of declining rates of growth, measured either over a year or a month.

Some reports have shown consumer spending rose during the holidays. Mastercard reported that sales between November 1 and December 24 were 3.4% higher than the comparable period in 2018, while online sales increased by 18.8%.

The Census Bureau reported that retail sales in November were $437.5 billion, excluding cars, trucks and parts. That’s up 2.5% from November 2018 on an unadjusted basis or 3% if seasonally adjusted.

The Fed’s report could mean consumers are paying off balances faster than previously.

Credit unions’ increase was 0.6% from October to November last year, compared with 1.3% one-month gain in November 2018, and a 2% gain in November 2017.

Banks held $955.1 billion in credit card debt in November, up 2.9% from a year earlier. That’s down sharply from 12-month gains of 5.4% in November 2018 and 7.3% in November 2017. The October-to-November gain was 1.1% in 2019, down from 2.1% in 2018.

Credit unions’ share was 6.1% in November, compared with 6.2% in October and 5.9% in November 2018. Extending the share to the nearest hundredth shows recent weakness: credit union share reached its all-time peak of 6.19% in July of 2019 but fell to 6.15% in October and 6.12% in November.

Banks’ share was 89.8% in November, unchanged from October 2019 and November 2018. Finance companies’ share was 2.2% in November, unchanged from October, but down from 2.3% in November 2018.

Finance companies held $23.3 billion in credit card debt, down 1.3% from a year earlier. That compares with a 10.5% drop a year earlier, and a 4.3% 12-month gain through November 2017. From October to November 2019, balances fell 0.13%, compared with a 0.2% gain a year earlier.

Lenders of all types held $1.02 trillion in credit card debt in November 2018, up 2.4% from a year earlier. The 12-month gains were 3.6% through November 2018 and 5.9% through November 2017. The one-month gain was 1.1% from Oct. 31 to Nov. 30, 2019 down from a 2% gain a year earlier and 2.5% through November 2017.