Since the recession, Americans who once were quick to charge their credit cards have been collectively paying down their debt. The median household credit card debt in 2007 was at an all-time high of $3,400. By 2013 it had dropped to $2,300, its lowest level in 20 years, according to the most recently released Federal Reserve Survey of Consumer Finances.
Credit card balances declined for virtually every demographic in the country, regardless of the household's income level, age of the head of the household, family size, region, race or ethnicity or whether they lived within a metropolitan area.
Couples with kids paid down a higher percentage of debt than other family types, and people in the South came in first for the U.S. region that paid down the most.
Both white and non-white households paid down credit card debt at the same rate, while non-city dwellers bucked trend and actually gained debt.
Source: U.S. Federal Reserve
What has caused people to pay down their debt? Lindsey Piegza, chief economist at the firm Sterne Agee, said consumers have been reluctant to take on debt since the economy bottomed out.
“Consumers are increasingly concerned about financing today's spending with tomorrow's dollars,” Piegza said. “Consumers bit off way more than they could chew before the recession, and so maybe they've learned a little more of their lesson this time around.”
A 2014 Gallup poll showed more consumers are paying off their card balances in full each month, have lower overall balances and own fewer credit cards than before the recession.
Professor of economics Peter Morici at the University of Maryland added that Americans are wary of the big banks that issue credit cards.
“People don't like to use credit cards anymore, I mean, that's all there is to it,” Morici said. “They're not very enthusiastic about credit cards, because the banks are very tough with them in terms of their rules and so forth and the interest rates are too high.”
Now, with the Fed looking to raise interest rates in the next few months, rates on consumer debt – including credit cards – may also increase, and some economists are predicting that more cautious consumers will continue to pay down credit card debt and spend more modestly.
"I think that people will spend more money, but they'll pay off their credit card balances or pay them off very rapidly, and they'll find other ways to finance the things they want," Morici said.
"The days of finishing your basement, going to the Home Depot and charging everything on your credit card are over," he added.
Link to the data: 2013 U.S. Federal Reserve Survey of Consumer Finances.