ABA report: Credit card market continued to normalize in Q1 2022

Consumers continued to manage their credit well in the first quarter of 2022, a sign of continued U.S. consumer strength during that period, according to the American Banking Association’s most recent quarterly Credit Card Market Monitor, released today. The report also found that credit card credit outstanding as a share of disposable income remained well below pre-pandemic levels in the first three months of the year, and inflation-adjusted monthly credit card purchase volumes eased across risk tiers.

Real monthly purchase volumes eased 2%–3% across risk tiers compared to the previous quarter, the first decrease in seven quarters. On an annual basis, purchase volumes increased 13%-17% across risk tiers as inflation and economic recovery from the 2020 recession put upward pressure on consumer spending. The share of cardholders who paid their balance in full each month decreased to 35.5%, while the share of those carrying a monthly balance rose to 40.9%.

Credit card credit outstanding as a share of disposable income increased to 4.72% in the first quarter but remained well below its pre-pandemic level of 5.42%. Likewise, the effective finance charge yield—which measures interest payments relative to total outstanding credit in the market—increased to 12.1% from a four-year low as the Federal Reserve began raising interest rates.

“This new data indicates consumer credit use and credit access are slowly normalizing to pre-pandemic levels,” said ABA Chief Economist Sayee Srinivasan. “With a strong labor market and ample savings, consumers remained well-positioned to meet their financial obligations as the year began. Still, with high inflation and rising interest rates, it’s important for consumers to remain vigilant about keeping debt at manageable levels going forward.”