ABA report: Consumers effectively managed credit despite economic turmoil

Consumers continued to manage their credit well despite economic headwinds in the second quarter of 2022, according to the latest ABA Credit Card Market Monitor released today. The report found that credit card credit outstanding as a share of disposable income remained well below pre-pandemic levels in Q2 while inflation-adjusted monthly credit card purchase volumes increased across risk tiers (prime, subprime, and super-prime), reflecting solid consumer spending earlier this year.

The December 2022 Monitor, which reflects credit card data from April to June, shows that real monthly purchase volumes increased 4%–8% across risk tiers compared to the previous quarter. On an annual basis, real monthly purchase volumes increased 7%–11% across risk tiers. Meanwhile, credit card credit outstanding as a share of disposable income continued to normalize in the second quarter, though the second quarter reading of 4.8% remains well below average 2019 levels of 5.4%. The effective finance charge yield—which measures interest payments relative to total outstanding credit—was essentially unchanged for the quarter at 12.1%.

“The Monitor indicates that consumer credit card use is continuing to normalize,” said ABA Chief Economist Sayee Srinivasan. “Rising interest rates and high inflation are putting pressure on consumer finances, but the labor market remains strong and consumer spending is holding up. Our data suggest that many consumers were in a position of strength as the first half of the year came to a close.”