Today’s Consumer: Bigger Credit Card Debts, Smaller Bank Deposits

America’s credit card hole is just getting deeper and deeper. 

The four largest banks in the US all saw higher credit card spending by their customers in 2023 than the year before, The Wall Street Journal reported on Wednesday. And it doesn’t look like that debt will be paid off anytime soon either.

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Some records aren’t meant to be broken. At the start of last August, US consumers hit a combined $1 trillion in credit card debt for the first time ever. Five months later, and… it’s gotten a little worse, thanks in part to December’s better-than-expected holiday retail sales.

While debt is at a new peak, the ascent has been building since the pandemic. “Over the past two years, Americans’ credit card balances have skyrocketed 40%,” Bankrate’s Ted Rossman told CNBC. And many of the pandemic-era safety nets — stimulus checks, rent moratoriums, student loan payment pauses — have all dried up. That’s contributed to bank deposits dropping year over year, as consumers, especially at the low-income end, have been dipping further into credit card debt to stay afloat: 

• Credit card spending at JPMorgan Chase, Bank of America, and Wells Fargo has gone up every year since 2020 — though spending by Citigroup customers went down slightly in 2022 before going back up. At Chase, spending was up 9% year-over-year in 2023. It was even higher at Wells Fargo, clocking in at 15%.
• Delinquent payments at all four banks have been on the rise since 2021. Unpaid balances rose 14% at JPMorgan YoY and 9% at Bank of America. A recent survey from Bankrate found that 56 million credit card holders have been in debt for at least a year.

The Cost of Learning: Consumers are increasingly seeking bargains — even in higher education. Enrollment in community colleges — especially those with vocational programs — is on the uptick, Bloomberg reported, rising 2.6% from 2022 to 2023. 

Many Americans have seemingly begun to lose faith that four-year schools are the de facto gateway to financial security. In one survey reported by The New York Times, the percentage of young adults who said that a college degree is “very important” fell to 41% from 74% in the last 10 years or so. They’ve adopted a Good Will Hunting attitude, preferring the $1.50 in late charges at the public library to $150,000 in tuition.