A new report by CardHub.com found that consumers paid down approximately $32.5 billion in outstanding credit card debt in just the first three months of 2014. That may seem like a lot – and it is – but it also represents a trend in declined payment amounts for the past several years.
Consumers paid off 1% less this year compared to 2013, and paid 5% less than in 2012.
Officials with CardHub say that paying off so much debt during the first part of the year isn’t unusual. Tax refunds, annual salary bonuses and New Year’s Resolutions all fuel consumers’ efforts to pay down debt.
However, the best practices employed during the first part of the year likely won’t last.
The report found that consumers ended 2013 with 6% more credit card debt than they began the year. As a result, CardHub projects 2014 will end with a $41.9 billion increase in credit card debt; 8% more than incurred last year.
In addition to paying down a large chunk of debt in the first part of 2014 consumers also made improvements on their current balances and default rates. The average household credit card balance declined by $352 during the first part of 2014 and the quarterly default rate fell 0.03% to 3.32%.
CardHub suggests consumers take into several actions in order to decrease their overall household credit card debt. The most important being building a budget and sticking to it.
2014 Credit Card Debt Study [CardHub.com]