The Checkout

A Temporary Pullback in Credit Card Debt

Nancy Trejos

Here's some interesting, and somewhat positive, data I recently came across.

According to TransUnion, one of the three major credit reporting bureaus, average credit card debt has declined for the first time since early 2007. Nationwide, the average debt per credit card borrower dropped 1.25 percent to $1,673 in the first quarter of this year from $1,694 in the previous quarter.

In the District, the average borrower had $1,884.79 in credit card debt in the first quarter, down from $1,971.25 in the last quarter of 2007.

The same trend held true for some Virginia and Maryland suburbs.

In Fairfax, for example, average credit card debt was $1,848.33 in the first quarter, down from $1,898.87 the quarter before.

Why the sudden pullback?

"It's probably a combination of things," said Jeff Morrison, manager of research and econometrics at TransUnion, in an interview this week. "A combination of consumer confidence and consumers looking ahead, and looking at gas prices. And they're pulling back on expenditures and catching up on what they have spent on."

But this may just be a temporary blip. Morrison said he expects the average debt to edge back up as increases in gas prices become more of a financial burden on borrowers.

"We see there's a good possibility that credit card debt will continue down next quarter and then tick up over time," he said.

By Nancy Trejos |  June 30, 2008; 7:05 AM ET Nancy Trejos
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Please email us to report offensive comments.

Do you think that the stimulus checks could have been responsible for the reduction in credit card spending?

Les Cook
Pineville, WV 24874

Posted by: Les in WV | June 30, 2008 9:47 PM

It's possible that with all the media coverage of the current economic situation that savings and getting in better financial shape has become more top-of-mind for American consumers.

Or it could be a blip. I'm curious to see how this shakes out.

Kevin Cafferty

Posted by: Kevin | July 1, 2008 3:45 PM

American are reducing credit card spending because of current economic crisis, and they want to reduce there Debt and this is the only solution to the Economic crisis.

Posted by: xero sector | July 10, 2008 2:41 AM

I agree with Kevin, I think this is merely a combination of rising gas prices and fear of the economic future. I think people have temporarily waken up to reexamine their spending habits...well, 1.25% of their spending habits. Like with all aspects of the financial industry, you have to look at the long-term trends and not jump to conclusions based on such a small shift over such a short time frame.


Posted by: Walter | July 14, 2008 4:19 PM


Posted by: mtAglgEPd | August 15, 2008 6:50 AM

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