The Federal Reserve’s G19 statistic for consumer revolving credit outstanding racked up a second consecutive monthly increase for June, up a preliminary 7.9 percent on an annualized basis. May’s growth was a revised 5 percent annualized increase. This is certainly a healthy sign that consumer spending on credit cards is increasing, although it is difficult to translate these increases just yet to an upturn in actual revolving outstandings that are generating interest income to issuers. The G19 statistic includes receivables that may be paid off by consumers in the next account cycle (convenience usage).
A retrospective study recently published by TransUnion reveals the problem for issuers; consumers made $72 billion more in card payments than they made in purchases between Q1/2009 and Q1/2010. The highest pay-down rates were among prime consumers, who are less prone to charge offs. Mercator’s consumer research confirms a continued reluctance on the part of credit cardholders to revolve balances.
Click here for more: http://www.federalreserve.gov/releases/g19/current/default.htm
