ABA report: Consumers managing credit well despite continued headwinds

Consumers continued to manage their credit well despite economic headwinds in the third quarter of 2022, according to the latest American Bankers Association Credit Card Market Monitor released today. The report found that credit card credit outstanding as a share of disposable income rose but remained well below pre-pandemic levels in Q3.

The March 2022 Monitor, which reflects credit card data from July to September, shows that real monthly purchase volumes decreased 3% to 5% across risk tiers compared to the previous quarter. On an annual basis, real monthly purchase volumes increased 3% to 4% across risk tiers. Meanwhile, credit card credit outstanding as a share of disposable income continued to normalize in the third quarter, though the third quarter reading of 4.98% remains well below average 2019 levels of 5.37%. The effective finance charge yield—which measures interest payments relative to total outstanding credit—rose 96 basis points to 13.12%, due to upward pressure from interest rate increases.

“Our latest report indicates that consumer credit card use is continuing to normalize to pre-pandemic levels,” said ABA Chief Economist Sayee Srinivasan. “The Federal Reserve’s interest rate hikes are putting added demands on consumer finances. Notably, the labor market remains strong, and consumers have continued to manage their obligations well.”