Study: Credit Cards Increase as Borrowing Mechanism for Consumers

CFPB’s Office of Research finds new trends in payment habits by consumers who carry a credit card balance from month-to-month.

In most cases, consumers use credit cards to borrow and sustain a positive balance for nearly a year, sometimes longer, according to a new Consumer Financial Protection Bureau Data Point: Credit Card Revolvers .

The CFPB’s Office of Research, using data from the Credit Card Database between April 2008 and April 2016, “examines how often balances are revolved on an account, or borrowed, how long balances are revolved, and how regularly they are paid down,” according to the report.

About two-thirds of actively used credit card accounts carry a revolving balance, it states. In cases where consumers with revolving credit have a positive balance on their account, a “substantial proportion” have a balance for two years or more.

“Accounts also show variation in their repayment patterns. Some revolvers appear to take on debt and then make regular payments on this debt. Others show signs of revolving a more-or-less constant amount for long periods with little pay down until a lump-sum payment of the balance in full,” the CFPB reports.

Researchers found varying trends in credit card repayment by geographic region and credit scores.

While credit cards are a safe and convenient means of paying for goods and services if consumers budget properly, this research shows increasing borrowing trends using credit cards and resulting revolving debt on their accounts.

WalletHub, in its Credit Card Debt Study: Trends & Insights  released in June, found consumers’ outstanding credit card debt is at the third highest level since the end of 2008—$985 billion in the first quarter 2019—compared to $952 billion in 2018.

Consumers repaid $38.2 billion in credit card debt in the first quarter this year, according to the report.