In the aftermath of the financial crisis US consumer credit card debt fell for the first time in years, a combination of people tightening their belts during a severe recession and defaults by those who were simply not able to pay. But the deleveraging didn’t last long and credit card debt started growing again in 2010. Last quarter, first quarter payments fell to their lowest level since the crisis down 1% from last year and 5% from 1Q12.

“While U.S. consumers paid down roughly $32.5 billion in outstanding credit card debt during the first quarter of 2014, that actually represents a 1% decline relative to Q1 2013 and the continued deterioration of credit card habits as Great Recession lessons fade with time,” writes Odysseas Papadimitriou at CardHub.

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Weak retail sales didn’t bolster net credit card payments

Credit card charges and payments are incredibly seasonal. The bulk of charges occur in the fourth quarter because of the holidays and most payments follow in the first quarter, largely because people are paying off expenses from the last few months but also a combination of year-end bonuses being put to good use and resolutions to get out of debt. For payments to slip in the first quarter likely means that the 2014YE average debt level will be higher than it was in 2013 after several years of being stable.

This is especially surprising because last quarter was terrible for many retail stores. Since the CardHub numbers are looking at the net payments, you would expect the lower level of consumer spending to result in higher net credit card payments, but that doesn’t seem to have been the case.

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Charge-offs stable and low, giving a mixed view of consumer debt

One way to interpret this is that people have forgotten about the financial crisis faster than the economy has actually recovered from it, but there are bright spots to recent credit card data that make it hard to draw such a clear picture. Even though first quarter payments were down, quarterly charge-offs have stabilized close to record lows, and well below the levels we saw in 2009 and the first half of 2010.

The full picture seems to be consumers who are increasing their debt but are also in a better position to handle that debt. There have been reports that consumer confidence is returning and that the labor market is improving, and if the rising credit card debt is a sign that people’s financial situations are more secure it could be a good sign for the economy.

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