Credit Cards - Are they being paid down?

There has been some media interest in this question over the past couple weeks. The New York Times had a story about this a few days ago. In it they say that "analysts say that a significant portion of the decline is actually the result of financial institutions writing off billions of dollars in credit card debt as losses."

In fact, based on my crunching of the figures, it seems very clear that all of the decline is due to charge offs.

The first thing you need to know about credit card lending is that it's incredibly seasonal. As a group, credit card users run their balances up for Christmas and then pay most of those balances back during the next quarter. Behind this seasonality, there is a slow steady growth in balances. That growth slowed significantly in 2009, but never reversed.

So if your question is "Are people paying down their credit cards?" The answer appears to be that some people are, but not people in general.

Figures for this graph were generated from the FDIC's Quarterly Banking Profile, and the Fed's quarterly charge off figures. The impact of SFAS 167 (which brought credit card securitization trusts back onto bank balance sheets on January 1, 2010) was calculated by going through the top 20 banks' quarterly 10-Q's and generating the figures. I can't recommend that as a way to spend your time.