Americans reduced credit card debt in the first quarter of 2013 at a slower pace than the previous year, prompting concerns that the nation is about to punch the accelerator on debt this year.
CardHub.com released its quarterly report on credit card debt and found Americans had more revolving debt than a year ago, despite reducing their debt level by 7 percent compared to the last quarter of 2012.
“Until recently, we could point to the fact that the credit management was improving consistently relative to previous years as a silver lining,” said Odysseas Papadimitriou, CEO of CardHub. “However, the numbers indicate that we’re starting to regress a bit…”
CardHub said the Great Recession was a wake up call for American consumers, but the company says the country is on track to add $47 billion in new charges this year.
A contributing factor to the trend of rising credit card borrowing would be the growing population. So an increase in borrowing could be expected. And that increase does boost consumer spending and the economy, to a degree.
The real question within the credit card numbers is what the people are using the credit for and how they are managing their accounts.
If people are using the cards to survive, buying groceries and gas and carrying more and more debt, then it’s a bad sign. If however, the cards are being used for bigger purchases that people payoff in one to two months, then it’s a good sign.
The best way to know whether more Americans are in the first group or the second is the average household balance.
CardHub says its now $6,591, which is among the lowest quarterly averages of the last four years.