The January-March period is typically when consumers pay down their credit card debt after spending heavily during the holiday season. However, this year, the decline in credit card debt was only 1.5%, compared to the average decline of 3% in the past 10 years.
This slower decline in credit card debt is likely due to the rising cost of living. As inflation has reached near 40-year highs, many consumers have had to use their credit cards to cover basic expenses. As a result, credit card debt has remained near a record high.
“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 US research and consulting at TransUnion.
It remains to be seen whether consumers will be able to pay down their credit card debt in the coming months. If inflation continues to rise, it will put even more pressure on household budgets and make it even harder for consumers to pay off their debt.