NEW YORK–Americans are backing off a bit following a strong surge in credit card spending that pushed Americans’ outstanding card balances above $1 trillion.
New data show credit-card spending has been growing more slowly than debit-card spending since late 2024, the first such period in nearly four years, according to the latest spending data from Visa and Mastercard, the Wall Street Journal reported.
Recently, household budgets have been under pressure on several fronts, from the resumption of student-loan payments to high credit-card interest rates to rising prices, the Journal noted. At the same time consumers have become more cautious about taking on more debt, some issuers have focused on higher-income cardholders.
‘Meteoric Rise’
“We saw this meteoric rise in credit-card debt,” Charlie Wise, senior vice president at TransUnion, told the Wall Street Journal. “We’re seeing consumers rein themselves in.”
As the CU Daily has reported and as the Journal also noted, amid economic uncertainty, “buy now, pay later” (BNPL) financing has exploded among consumers.
Meanwhile, debit-card growth surged during the Covid-19 pandemic as consumers increasingly paid digitally through contactless cards or through apps, including for everyday purchases such as food.
Overall Spending Still Rising
Overall, the Journal reported, spending on both credit and debit cards is still rising. In the first six months of this year, U.S. debit-card spending—which typically accounts for a little more than half of all card payments—rose 6.57% from a year earlier. Credit-card spending, by comparison, rose 5.65%, the Visa and Mastercard data show, the Journal said.
When credit-card spending growth began trailing debit late last year, it ended a streak of 14 consecutive quarters in which the opposite was true. It is a reversion to the prepandemic norm, the report added.
As the CU Daily reported, slower balance growth and a drop in delinquency rates from a year earlier suggest consumers are actively managing their debt, according to a recent TransUnion study.
Personal Loans Surge
“Another sign that more Americans are taking a hard look at their finances is a recent surge in personal loans typically used to consolidate credit-card debt,” the Journal reported. “Personal-loan originations jumped 18% in the first quarter from a year earlier, bringing total balances to a record $257 billion.”
