Borrowing among consumers jumped in March amid a sharp spike in credit card use.
Recent data from the Federal Reserve shows credit in the aggregate leaping by $26.5 billion in March following a $15 billion increase in February.
According to the Fed, total revolving debt in March was $1.239 trillion in March, compared to $1.221 trillion the prior month.
Revolving debt on an annual basis rose more than 17% for March, vastly exceeding the 5.7% yearly gain in February.
And as noted here Sunday (May 7), research by PYMNTS provides a glimpse into who is taking on this debt, with 42% of millennials and 27% of Gen X saying they’d increased their use of credit products through the past year “significantly,” and for everyday purchases.
It was a trend that was borne out last month when Mastercard released quarterly earnings showing consumers using their cards for everyday expenses.
Just 45% of consumers say they pay their balances in full each month, which means a majority of consumers still carry a balance. PYMNTS research found that the average balance — cutting across generations — exceeds $4,500. The highest average balances were held by seniors and baby boomers, at more than $5,100.
And as reported in the most recent PYMNTS study examining the paycheck-to-paycheck economy, 60% of adult U.S. consumers were living paycheck to paycheck as of March, a status that includes nearly three-quarters of millennials. Among this group 87% have at least one credit card, with 84% carrying balances on those cards.
There’s some indication that credit could be a lifeline for consumers dealing with financial emergencies. PYMNTS research has shown that 62% of consumers experienced a financially distressing event over the last three years.
Meanwhile, in another sign of the pressures facing consumers, further research by PYMNTS finds that a third of grocery shoppers have switched to private label brands or store brands to save money.
Fifty-seven percent of grocery shoppers have scaled back on what they consider nonessential spending, a trend that’s especially popular among older consumers.
“Trading down on quality is the one habit in which grocery shoppers minimize costs even more aggressively than their retail counterparts,” PYMNTS wrote last week. “Thirty-six percent of grocery shoppers purchase cheaper alternatives of the same products, such as store brands; this share is 35% for retail shoppers.”
The post Consumer Borrowing Jumps Amid Sharp Spike in Credit Card Balances first appeared on PYMNTS.com.
Source: www.pymnts.com
