Credit Card Confidence Index Plunges to Lowest Level Since 2018

Credit card confidence tumbled in December, according to the latest LendingTree Credit Card Confidence Index, ending 2023 at its lowest level since tracking began more than five years ago.

Every month since September 2018, LendingTree has asked a nationally representative sample of credit cardholders the following: “Think about all of your credit cards. On a scale of 1 to 5 (5 being very confident, 1 being not at all confident), how confident are you that you can pay the entire monthly statement balance on all of those cards in full this month?” Those who responded with 4s and 5s were called confident, while those who responded with 1s or 2s were deemed not confident.

Confidence has been falling slowly throughout 2023, but the decline accelerated in December, driven by a major drop among women.

Here’s what you need to know.

Key findings

• Credit card confidence fell to its lowest level on record. Just 51% of cardholders said they were confident in their ability to pay their credit cards’ monthly statement balances in full this month. That’s a 7-point drop from last month and the lowest since tracking began in September 2018. The previous low was 53%, set in June 2022 and September 2019.
• A December decrease isn’t typical. With holiday shopping in full gear, it may not seem strange that cardholder confidence would fall, but it’s unusual. This marks the first time since December 2018 that we saw a month-to-month dip in confidence in December. The average December bump in the last four years? 6 points.
• Just 40% of cardholding women today said they’re confident in paying their credit cards’ monthly statement balances in full this month. For the first time in index history, more women said they weren’t confident than said they were confident (45% versus 40%). Women’s confidence is down 12 percentage points from November and is the lowest number since tracking began. The previous low was 45% in June 2022.
• Gen Z cardholders show the highest confidence today, while Gen Xers show the lowest, but both are lower than last month. 62% of Gen Zers expressed confidence in being able to pay their credit cards’ monthly statement balances in full this month, compared with 56% of baby boomers, 52% of millennials and 40% of Gen Xers. It’s the 10th straight month in which Gen Zers were the most confident, and the 22nd in the last 25. Every age group saw at least a 3-point drop in confidence, with millennials falling the most (11 points, from 63% to 52%).

Confidence falls to lowest level on record after rare December drop

It’s been anything but a happy holiday season for credit cardholders.

Just slightly more than half (51%) of cardholders said they were confident in their ability to pay their credit cards’ monthly statement balances in full this month, while 34% said they weren’t confident and 15% were neither. That is both the lowest percentage of confident cardholders and the highest percentage of unconfident cardholders since tracking began back in 2018. The previous records were 53% (set in June 2022 and September 2019) and 31% (set multiple times, most recently in June 2023).

That’s because they’re confident they’ll be able to pay it off quickly and aren’t overly concerned about paying a little interest to get what they want. On the other hand, people whose financial situation feels shaky may minimize the amount of debt they take on — or avoid it altogether — because they see it as too much risk in an uncertain time. That’s likely how many families across the nation feel this holiday season.

While a December decline is unusual, seen broadly, it’s a continuation of a trend that began after confidence peaked at 74% in October 2020. Consider the monthly averages for each of the past several years:

• 2020: 66.8% confident
• 2021: 65.5% confident
• 2022: 61.7% confident
• 2023: 59.4% confident

Those are significant decreases. While those yearly average declines aren’t huge, their consistency is noteworthy. After all, multiple years of small decreases eventually add up to a larger one, and that’s what we’re seeing here.

Then, you have a significant number of cardholders who use their cards only sparingly, putting a few dollars a month on them. Those folks are probably pretty confident in paying their statement balances off, too.

If you removed the credit cardholders from those two scenarios — leaving only those who use credit cards more frequently — that confidence level would likely be well lower.

Women’s credit card confidence craters

Women drove the bulk of the decline in December. Just 40% of women expressed confidence, while 45% said they weren’t confident. That’s the first time in the five-plus-year history of the index that more women weren’t confident than were confident. There had only been two other times where that came close to happening — confident women topped non-confident women by just 5 percentage points in June 2023 and June 2022.

It took a 12-percentage-point drop in confidence (from 52% in November to 40% in December) to make that happen. Meanwhile, men’s sentiments changed only slightly. In December, 64% of men said they were confident, down slightly from 66% in November.

The result is a massive gender gap, which, unfortunately, is nothing new. In the index’s five-plus-year history, there has never been a month in which women have been more confident about their credit card bills than men. In fact, there have only been eight months in which the gender confidence gap fell to single digits, but none since July 2021. (The gap was 7 points that month, equaling the record low set in April 2021.)

In December 2023, that gap stood at 24 points. That equals the biggest gap since tracking began, matching the one seen in July 2022 and January 2020.

The average gap since the start of the index is about 14 points.

Gen Z cardholders show the highest confidence, while Gen Xers show the lowest

Generally, the gap among age groups is less pronounced than the one between men and women. In December 2023, the youngest and the oldest cardholders were the most confident in their ability to pay their monthly statement balances in full: Gen Zers (ages 18 to 26) at 62% and baby boomers (ages 59 to 77) at 56%. Millennials (ages 27 to 42) were close behind at 52%, while Gen Xers (ages 43 to 58) brought up the rear at 40%.

We don’t have age group breakdowns for the entire history of the index, but Gen Zers and Xers have consistently been the most and least confident, respectively, in recent years. Gen Zers have been the most confident in 22 of the last 25 months, while Gen Xers have been the least confident in 31 of the last 32 months.

However, among all four age groups, none were above their average for the past nearly three years.

Expect the downward trend to continue, at least for a while

Historically, big drops in confidence have been followed the next month with an increase. I expect the same thing will happen in January, but I don’t think the bounce will last long.

That doesn’t mean that things will be great, though. The headwinds facing credit cardholders are real and significant, and many Americans’ financial margin for error is tiny. Something like a job loss, medical emergency or another significant unexpected expense could push them over the edge from feeling good about their financial situation to feeling pretty darn shaky.

One of the best things cardholders can do — whether they feel good about their finances or wobbly — is knock down their credit card debt. If you don’t, sky-high APRs mean it will only continue to grow.

The good news is you have options. A 0% balance transfer card might be your best weapon against high interest rates, though a personal loan can help, too. And don’t forget that you might be able to lower your interest rate with a phone call. An April 2023 LendingTree survey found that 76% of cardholders who asked for a lower interest rate on their credit card in the past year got one, with an average rate reduction of 6 points. That can turn a 30% card into a 24% card or a 24% card into an 18% card. It’s absolutely worth the call.

Methodology

LendingTree commissioned QuestionPro to conduct an online survey of 1,514 U.S. credit cardholders ages 18 to 77 from Dec. 11-16, 2023. The survey was administered using a nonprobability-based sample, and quotas were used to ensure the sample base represented the overall population. Researchers reviewed all responses for quality control.

We defined generations as the following ages in 2023:

• Generation Z: 18 to 26
• Millennial: 27 to 42
• Generation X: 43 to 58
• Baby boomer: 59 to 77

Media inquiries about the Credit Card Confidence Index

Want to talk to Matt about the latest Confidence Index numbers? Email him at [email protected]. You can also reach out via X at @matthewschulz or Instagram at @matt.schulz.