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It's holiday shopping season, which means consumer spending is about to reach the highest level of the year. Thanks to a healthy economy and low unemployment rate, Americans' confidence in their spending ability is greater than ever. As such, Americans have steadily taken on more credit card debt over the last few years.
Still, it's important to be mindful of the amount of credit debt you rack up during the holiday season. Many Americans enter the new year dreading their first credit card bill of the year, known as the post-holiday credit card blues. Here is a look at the current state of credit cards and debt as we head into the holidays.
Total Credit Card Debt
Total credit card debt in the U.S. has increased by 33% over the last five years, reaching $799 billion for the third quarter (Q3) in 2018, according to the latest Experian data. In the past year, credit card debt has increased by 6% overall in the U.S. when comparing Q3 2018 to Q3 2017.
Americans are increasingly relying on credit cards: 59.4% of Americans have a credit card as of Q3 2018. That's an 11% increase compared to the same quarter in 2015, and a 3% increase compared to Q3 2017.
Americans have 2.5 credit cards on average with an account history of 7 years and 3 months. While the average age of credit card accounts has decreased, it has been by a relatively small amount of 4%—or about four months—compared to Q3 2015.
|Credit Card Snapshot||Q3 2018|
|Average Number of Credit Cards||2.5|
|Average Balance on Credit Cards||$4,293|
|Average Limit on Credit Cards||$20,265|
|Average Credit Card Account History||7 years, 3 months|
|Credit Card Utilization Rate||21.2%|
|Percentage of Americans with a Credit Card||59.4%|
The average credit card balance for Q3 2018 was $4,293, an 11% increase compared to Q3 2015. Average credit card limits have only increased 8% to $20,265 in a period of three years.
Credit Card Debt by State
With overall credit card debt up 23% over the last five years, every single state saw an increase in total debt compared to the previous year. Nevada saw the largest growth as credit card debt increased by 8.5% over the last year. Florida came in second with an increase of 7.9%, while Georgia and South Carolina both saw an increase of 7.6% year-over-year. Arizona had a 7.2% increase, rounding out the top five states with the largest increase of credit card debt in the past year. The states with the smallest increase of credit card debt were Alaska at 1.7%, Vermont at 3.0%, Rhode Island at 3.2%, New Mexico at 3.2% and West Virginia at 3.2%.
Overall credit card debt grew 5.7% in the U.S. this past year, while the South had the largest increases:
- The South Atlantic region saw their credit card debt grow 6.9%
- The South Central region grew by 6.3%
- The West region grew 6.3%
- The Midwest region grew 4.5%
- The Northeast region grew 4.4%
Credit Card Late Payments by State
Credit card delinquency rates, or late payments over 90 days past due, have been slowly rising over the years, 34% when you compare Q3 2018 versus Q3 2015. In the past year, that rate grew 2.2%, which may likely be due to lenders willing to take on riskier consumers who have poor credit scores. While debt has grown steadily over the years, lenders are always assessing people based on the risk-reward of whether or not consumers will make payments on time for a new credit card.
Arizona had the highest late-payment percentage of 2.32% for Q3 2018 for bills that were 90 days or more past due. Mississippi had the second largest percentage of 2.21%, followed by Nevada with 2.10%. Washington had the lowest percentage of late payments at 1.01%, followed by Arkansas at 1.96% and then Utah at 1.08%.
When looking at the rate of late payments 90 days past due or more by region, the South Central region has seen their rates increase 37.1% since Q3 2015, the most of any region. The good news is that those same rates only increased 0.5% compared to Q3 2017, the smallest among all the regions. The South Atlantic region had the second largest increase in 90-days or more delinquency rates since 2015 at 34% and the largest year-over-year increase at 3.5%. The Midwest region has the smallest increase in payments that were 90 days late or more at 29.7% in three years.
Credit Card Utilization Rates Stay Steady
Credit card utilization rates have generally been steady over the last three years. During the holiday season, rates see a slight bump of around 2% when you average the percentage change between Q3 to Q4 going back to 2015. This is expected as shoppers are using more of their credit card limits most likely during the busy shopping season.
The same trend occurs in reverse when we move from the end of the year to the start, as Q1 utilization rates decreased by 7% when you average the change from Q4 to Q1 over the last three years together.
Credit Card Accounts Spike Before Holidays
Before the holidays, the volume of new credit card accounts typically increases as many people seek new credit to shop for the holidays. Overall, there were 21.1 million new credit card accounts in Q3 2018, a 21% increase compared to Q3 2015. While new account openings can fluctuate throughout the year, there was a 19% increase between Q2 to Q3 this year. For comparison, new credit card account openings increased 4% in 2017 for the same time period and only 1% in 2016.
Most Viewed Credit Card Types
People taking on extra debt or increasing their credit usage is expected when they feel better about their personal finance outlook. Between August and October 2018, credit cards without an annual fee were the most viewed, followed by secured cards and then rewards cards for visitors of Experian® CreditMatch™, our free service that matches consumers with credit cards based on their credit profile and spending habits.
Most Viewed Credit Cards by FICO® Score
Each credit card provider has a different set of credit requirements and depending on your credit score, some cards may not be available to you. While most people may be able to get approved for a new credit card, there are many others with lower credit scores or no credit history at all that make getting approved more challenging. Looking at the most viewed cards by FICO® Score shows the differences in popularity across different FICO® Score tiers. As FICO® Scores increased so did the views for cashback cards along with airline and travel credit cards.
For those people who don't have a FICO® Score, who sometimes are referred to as thin file consumers, secured cards were the most viewed—which makes sense for a group trying to establish credit. Among the other FICO® Score tiers the most viewed credit cards were:
People In This FICO® Score Range... View These Credit Cards the Most
|Credit Score||Rating||Most Viewed Credit Card|
|300-579||Very Poor||Secured Card|
|580-669||Fair||No Annual Fee cards followed by Rewards cards|
|670-739||Good||Rewards cards followed by No Annual Fee cards|
|740-799||Very Good||Rewards cards followed by No Annual Fee cards|
|800-850||Exceptional||Rewards cards followed by No Annual Fee cards|
|Source: Experian® CreditMatch™|
Find a Credit Card Using Your FICO® Score
Choosing the right credit card can be tricky, but Experian® CreditMatch™ can put you in control while you browse and learn in real time if you will be approved for a certain card. This saves time and makes sure that you do not have inquiries posted to your credit file by applying for a card, then not getting approved. Too many inquiries can lower your credit scores.
Improve Your Credit Score with Experian Boost
To improve your credit score, Experian launched a free product called Experian Boost. Through this new opt-in product, previously uncounted payments, such as utility and cell phone bills, will be factored into your credit score.
Consumers can allow Experian to connect to their bank accounts to identify utility and telecom payment history. After a consumer verifies the data and confirms they want it added to their Experian credit file, an updated FICO® Score will be delivered in real time.
Visit experian.com/boost now to register. By signing up for a free Experian membership, you will receive a free credit report and FICO® Score immediately and will be one of the first to experience Experian Boost.
The data for most viewed credit cards is based on Experian CreditMatch data from August 1 to October 31, 2018.
Editorial Disclaimer: Opinions expressed here are author's alone, not those of any bank, credit card issuer or other company, and have not been reviewed, approved or otherwise endorsed by any of these entities. All information, including rates and fees, are accurate as of the date of publication.
This article was originally published on November 28, 2018, and has been updated.