Credit Card Debt in Ireland: Recent Trends

The rapid build-up of debt by Irish households over the past decade has attracted attention to all aspects of personal borrowing. While most of the increase in personal debt has come from residential mortgages, the ease with which debt can be run up on credit cards makes trends in credit card borrowing of particular interest. The Statistics Department introduced a new and expanded monthly return for credit card issuers in early 2004; data from this return are now available and are analysed in this article. Trends in total personal borrowing and consumer credit relative to personal disposable income are also presented, to provide a broader context for the discussion of credit card debt. While credit card debt now accounts for a higher proportion of consumer credit than it did a decade ago, this has taken place in the context of greater use of cards for convenience credit. Measures of competition and profitability in the Irish credit card market show that competition has increased since a previous study in 1999 and that margins on credit card business have narrowed as a result. While market penetration here is above the euro-area average, international comparisons reveal that it is well below that of countries like Finland, the UK and the US. 1