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UC credit card balances rise sharply, new data shows

Credit unions and other lenders saw sharp increases in credit card balances from April to May, another sign that consumer spending is rebounding after the pandemic.

The Fed’s G-19 consumer credit report released Thursday showed credit unions held $ 60.6 billion in credit card debt in May. The total is still down 0.9% from the previous year and 7.1% from the month before the February 2020 pandemic. However, it increased 3.4% from April to May. , the first month-to-month gain since December 2020 and the strongest. monthly gain since December 2019.

Historically, May is the third most important month for credit card spending after the vacation months of November and December. Balances typically increase 1% from April to May, based on averages of Fed data from 2010 to 2019.

Sales generally drop from January to March and start to increase in April.

But after COVID-19 was declared a pandemic on March 11, 2020, historical patterns dissolved as the country entered a recession with few precedents. As savings rates skyrocketed, credit card balances fell sharply.

Credit unions‘ gains in credit card balances in May were also better than those of other lenders, allowing credit unions to improve their share. They held 6.5% of U.S. credit card debt in May, up from 6.4% in April 2021 and May 2020.

Banks held $ 836.9 billion in credit card debt, down 2.2% from a year ago and 11.5% from February 2020. However, it was up 2% , 1% from April to May. The banks’ share was 89.8% in May, compared to 89.8% in April and 89.7% in May 2020.

The Fed report coupled with CUNA’s monthly credit union estimates report released this month also shows that credit unions held $ 52.1 billion in unsecured consumer loans in May, up by 6.3% compared to May 2020 but down by 2.2% compared to April. These numbers are being influenced by Paycheck Protection Program (PPP) loans, which began in April 2020, as the NCUA requires their value to be reported in this category. They will disappear from the books because the SBA forgives them, as expected.

However, CUNA found other signs of improving members’ financial health in May:

  • Credit unions held a total of $ 392.8 billion in auto loans as of May 31, up 1.2% from April to May, their strongest performance since May 2018, when growth was 1.8 %.
  • Savings fell 0.5% from April to May, the first drop since December 2019 in the pre-COVID-19 era. Members feverishly started saving after COVID-19 was declared a pandemic in March 2020, which economists say is usually a signal of a recession.
  • Improved lending combined with lower savings allowed the loan-to-savings ratio to drop from 68.6% in April to 69.5% in May, the first month-over-month improvement since November 2020.

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