Personal credit card debt grows again
Credit card balances grew in May by 2.5 percent, according to the Federal Reserve, extending a 12 percent surge the month prior.
Matt Schulz, senior industry analyst for CreditCards.com, said the latest data are a “good sign” when combined with other economic reports that indicate increased consumer confidence and improving employment numbers.
“People are feeling a little better about things and feel they don’t have to worry about going out and buying that TV because they might lose their job,” Schulz said.
Schulz also pointed to a change in the way American consumers are using their cards. An increasing number of people are putting almost everything, from gum to appliances, on their credit cards and paying off the balance in the same month. The goal is to rack up rewards or cash back without having to pay interest on a carried balance.
“There’s almost a divide between a significant group of people who have gone away from credit cards entirely, and people who have moved towards using credit cards towards everything,” he said. “It seems like there’s a little less middle ground than there was.”
The spike in card debt could also be attributed to the particularly brutal winter experienced by much of the country. Warmer weather brought more people out of their homes and into malls.
The report from the Fed noted the average interest rate on credit card accounts was 11.83 percent in May, unchanged from the last examination in February.