Large Fall In Use Of Credit Cards Since The Crash

Key Point

Holders of credit cards are spending less and have cut their debt since the crash.

Introduction

An analysis1 of personal credit card spending from January 2007 (pre-recession) to October 2015 (most recent data) shows the following:

  • Total average monthly new spend fell significantly by 35.7% or €365 million from 2007 to 2015.
  • The number of personal credit cards in Ireland peaked in January 2009 at 2.22 million. This number has dropped to 1.69 million as of October 2015 – a fall of 527,000 (23.7 percent).
  • New monthly spend per card has fallen by 21 percent between 2007 and 2015 from €488 to €385
  • Outstanding credit card debt peaked at €3 billion in December 2008 but has declined by 43 per cent to €1.7 billion in October 2015.

Average New Monthly Spending

Table 1 shows average monthly new spend from 2007 to 2015 (taken from yearly average).

Table 1

161216 T1-page-001
(Source: Central Bank)

Table 2 shows the decline in monthly spending per credit card holder since 2007.

Table 2

161215 T2-page-001

New monthly spend per card has decreased by 21 percent between 2007 and 2015. A decline of €103 per month on average is noted, or a 3 percent per annum decline over the period as shown in table 2. Monthly spend has been increasing marginally since 2014. However, this is within an environment where the number of cards in issue has been declining.

Figure 1 illustrates the decline in monthly spend per card and the growth seen in 2014 and 2015.

Figure 1
161215 T3-page-001
(Source: Central Bank)

Indebtedness

The debt outstanding on credit cards in Ireland has declined from its peak in December 2008 of €3 billion to an October 2015 figure of €1.7 billion; a drop of circa 43 percent.

Credit card debt normally peaks in January. Table 3 shows the change in debt outstanding in January each year.

Table 3

161215 T4-page-001

The outstanding debt per card is shown in figure 2.

Figure 2

161215 T5-page-001

(Source: Central Bank)

Figure 3
161215 T6-page-001
(Source: Central Bank)

Figure 3 shows the average monthly repayment amount per card from 2007 to 2015, together with the average monthly new spend. Repayment amounts have decreased by 18.4% over the period; in line with the fall in average monthly credit card spend from €488 in 2007 to €385 in 2015 (to October) by 21.1%. Spending has averaged 4.6 percent less than repayments between 2011 and 2015.

Notes:

1 Based on Central Bank Monthly Money and  Banking Statistics Reports

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2 Comments

  1. Patrick 4 Jan 2016 at 1:37 pm

    Interesting piece of work.

    It might be useful (if possible) to include the interest charge & fees, which I assume this is what explains the gap between the what seems to explain a positive net repayment (Spending & Repayment) but a rising debt level during the early period.

    Also is there any data available on credit card limits in aggregate. If limits were dropping the pressure might be less good personal management and more lack of availability.

    Thanks

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