US Credit Card Debt Declined at Slower Pace than Usual in Q1 2023
Recent data released by TransUnion shows that U.S. credit card debt declined at a slower pace than it usually does during the first quarter of each year. Since 2013, the average drop in credit card balances between January and March has been 3 percent, but was only 1.5 percent in the first quarter of 2023, as high prices consistently put a strain on household budgets.
“As inflation rose to near 40-year high levels, many consumers have used credit to help manage their budgets, leading to record- or near-record high balances,” said Michele Raneri, vice president of U.S. research and consulting at TransUnion, according to Bloomberg.
Typically, consumers try to rein in their borrowing during the first quarter of each year after hefty spending during the holiday season, but the data shows that Americans haven’t been able to cut back like they have in previous years, with balances at a record high, up 19 percent from 2022.
Economists have been monitoring consumer card usage closely for signs of stress, especially amid growing concerns that the U.S. economy could fall into a recession after more than a year of interest-rate hikes by the Federal Reserve (Fed).
Additionally, the New York Fed released its first-quarter report on household debt earlier this month, and found that total household debt rose by $148 billion to $17.05 trillion.