U.S. consumers are on pace to tally another $55.8 billion in credit card debt this year, despite paying off $34.7 billion in card debt during the first quarter, according to CardHubs latest Credit Card Debt Study.
Though the first quarter, debt pay down was 7% larger than what occurred in 2013 and 2014. Debt reduction is common in the beginning of the year because of the timing of annual salary bonuses, tax refunds and the resolve provided by New Years Resolutions.
Seemingly impressive percentage changes also are much easier to realize from a high starting point and the average households first quarter credit card balance - $7,177 - was at the highest point in six years. Consumers finished 2014 with more than $57 billion in new debt.
The global economy has been in something of a holding pattern, as the suppressed cost of oil and the strength of the dollar have provided a windfall for some households while making the earnings expectations of many companies unattainable, according to the study. While recent reports foretell the continued growth of the U.S. economy, analysis of the newest data on consumer spending and payment habits could serve to either substantiate enthusiasm or dampen it with the clouds of caution.
Other Key Findings:
- Credit card defaults also declined by more than $350 million in Q1 2015 compared to the first quarter of 2014, bringing the Q1 default rate to its lowest point since 1995.
- The Q1 2015 debt paydown is still 29% below the recent peak payoff $44.8 billion in the first quarter of 2009.
- If the average household transferred credit card balances to one of the markets current best balance transfer credit cards, they could save up to $1,700 in finance charges, depending on the payoff timeframe.