Michaela Ross
Nut Graf/News Hook: Since the recession, Americans who once were quick to charge their credit cards have been collectively paying down their debt. American families’ median credit card debt went down from $2,800 in 2010 to $2,300 in 2013. Meanwhile, the personal savings rate has increased from 2.5% pre-recession to 5.5% in 2015. Now, with the Fed looking to raise interest rates in the next few months, rates on consumer debt — including credit cards — may also increase, and some economists are predicting that more cautious consumers will continue to pay down credit card debt and spend more modestly.
Description of Data and Link: Every 3 years, the Federal Reserve surveys American households about their finances. The percentage of Americans with credit card debt, as well as their current median balances, can be seen on tabs with “Table 89 01”-“Table 13 01” here. The credit card data is further broken down by percentile of income, age, education, number of dependents, race, work status, geographical region, occupation, housing status and whether they live in an urban area. The data stretches from 1989-2013, and was released in fall of 2014.
(see attached Excel sheet)
Bulletin with the latest survey:
http://www.federalreserve.gov/pubs/bulletin/2014/pdf/scf14.pdf
Sources: I have already spoken to Peter Morici, economist at the University of Maryland about consumer habits with credit cards. He believes consumers will continue not to trust credit card use — especially with credit cards issued from large banks — because they don’t trust large banks after the recession. He feels people will find other ways to finance large purchases through borrowing from family or home improvement loans, even as interest rates go up.
Contact info: 240-429-7824
pmorici@rhsmith.umd.edu
I have also spoken to economist Stan Shipley at International Strategy and Investment 212-446-9474, sshipley@isigrp.com and Louis V Crandall, economist at Wrightson ICAP 212-815-6542, lcwrightson.com.
There is also discussion about cautious consumers being more wary of charging credit cards in this spring’s consumer reports.
Possible Obstacles/Angles to Explore:
I would like to compare the Fed’s data to that of TransUnion. TransUnion releases a quarterly report showing average credit card debt and delinquency by state and their data is more current than the Feds, but I believe it’s measured differently. I am contacting their offices to investigate. Here is their latest report: http://www.transunioninsights.com/IIR/?ref=b_a
And here is an interactive map of credit card debt by state made by the Washington Post in 2012 using TransUnion data: http://www.washingtonpost.com/blogs/govbeat/wp/2013/08/20/ranking-the-states-credit-card-debt/