Consumers slashing credit card balances since recession

The amount of money people owed on their credit cards issued by both banks and retailers has fallen appreciably since the end of the recession, as more consumers have tried to focus on cutting debts and spending more responsibly.

Existing credit card balances on accounts issued by banks fell to 28 percent below their all-time peak in April, slipping to $531 billion, according to the latest National Consumer Credit Trends Report from Equifax. That's down from barely more than $731 billion in January 2009. Meanwhile, though, amounts owed on store-issued credit cards have remained more or less the same during that time, keeping up with seasonally-adjusted levels seen prior to the recession.

For retail cards, these balances hold even as the number of these accounts held by consumers fell 22 percent in the 28 months before December 2010, and have only slightly improved since, rising 4.7 percent to a total of 173 million accounts, the report said. Now, the total credit limits on all retailer-issued cards has increased by about $5 billion, thanks mostly to increasing available credit.

For bank credit cards, the total credit limits have more or less held steady over the past six months with a total of $2.4 trillion available, the report said. That's about 6.6 percent higher than the all-time low observed in February 2011. Credit utilization, which measures how much consumers have maxed out their credit cards, now stands at just above 22 percent, about even with the record lows observed in November 2007, prior to the onset of the recession. And between April 2010 and April 2012, charge offs on these bank-issued accounts have declined to less than 6 percent of all balances, down from 13.2 percent.

At the same time, the roll rates suffered by consumers (that is, those who saw current balances fall 30 days behind for the first time) remained at less than 1 percent for the second consecutive month, the report said. This was the first time in more than five years that this took place.

Consumers seeking new credit cards would be wise to take the time to check their credit reports. This is because unfair markings could be having a negative effect on their credit standings. Fortunately, working with a credit repair company can help to clear up these issues.