Consumer Credit Card Spending and Debt Continue Steady Growth

The Consumer Financial Protection Bureau's latest consumer credit card market report shows approximately 28% of consumers with a credit file had an account on their credit report assigned to third-party collections; while delinquencies and average account balances increase.

9/4/2019 8:00 AM

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Consumer Credit Card Spending and Debt Continue Steady Growth

Credit cards represent the largest consumer lending market in the U.S. as total outstanding balances, delinquencies and charge-off rates continue to rise at nominal rates, according to the Consumer Financial Protection Bureau’s Consumer Credit Market Report for 2017/18.

Congress requires the bureau to monitor the credit card marketplace and to produce a report on a biennial basis. This report, the bureau’s fourth, found that “market conditions remain stable as a result of low unemployment, modest wage growth and high consumer confidence … and late payment and default rates have risen modestly but remain below pre-recession levels,” according to a news release from the CFPB.

Debt collectors continue to play a role in this market as spending increases and consumers’ balances continue to roll over from month-to-month. According to the report, “in 2018 roughly 28% of consumers with a credit file had a ‘collections tradeline’ (i.e., an account that appears on a consumer’s credit report as a debt in collections) listed for a debt assigned to a third-party collector. Of these consumers, roughly 30% had at least one credit card tradeline assigned to a third-party debt collector.”

Overall, consumers’ total credit card balances reached about $900 billion by the end of 2018 compared to $792 billion before the recession.

The average general-purpose credit card (meaning cards accepted by a wide variety of merchants) balances for consumers with at least one card with a balance were roughly $5,700 at the end of 2018; the highest balance since the middle of 2009, according to the report.

According to the report, while credit card balances and spending continue to increase, the CFPB found that credit card issuers have lowered their daily limits on debt collection phone calls for delinquent credit card accounts since the last report was released in 2017.

“Average daily attempts remained well below these stated limits, which is consistent with findings from the 2017 report. Most issuers now supplement their internal collections communication strategy with email and text messages, but these channels are used primarily for account servicing and not for delivering required collections notices.

Issuers’ third-party collection networks typically do not use email and text,” the report states.

The bureau noted in the report that the Notice of Proposed Rulemaking to amend the Fair Debt Collection Practices Act addresses options for communications practices, including modern forms of communications such as email and text messages, and disclosures. (ACA International members may click here to find more information on the proposed rule and how to file comments before Sept. 18.)

Additional findings in the report include:

  • “Total outstanding credit card balances have continued to grow and at year-end 2018 were nominally above pre-recession levels. Throughout the post-recession period, including the period since the bureau’s 2017 Report, purchase volume has grown faster than outstanding balances.”
  • “After falling to historical lows in the years following the recession, delinquency and charge-off rates have increased over the last two years. Late payment rates have increased for new originations of general purpose and private label cards, both overall and within different credit tiers.” For example, the annual charge-off rates for general purpose cards increased in 2017 and 2018 and by the end of 2018 equaled 5.7% of balances.
  • “At $4.3 trillion, the aggregate of credit card lines extended (total line) is near its pre-recession high, while cardholding incidence remains further from its historic high.”
  • “Cardholders with prime or super prime credit scores (between 660 and 720 or greater) continue to account for most credit card debt and spending. However, in the last few years, the share of total credit card debt held by consumers with relatively lower credit scores has been increasing.”
  • “Cardholders with lower scores have also increased the average number of credit cards they hold. In addition, average credit card debt has risen faster for these cardholders over the last few years than it has for cardholders with higher scores, although all credit tiers have seen some growth in average outstanding balances. Aggregate credit card indebtedness for consumers with lower scores, however, remains below 2008 peaks.”

Read more findings in the Consumer Credit Market Report here.


Follow ACA International on Twitter @ACAIntl and @acacollector, Facebook and request to join our LinkedIn group for news and event updates. ACA International members are welcome to submit news items for possible publication to comm@acainternational.org. Visit our publications page for news submission guidelines and subscriptions to ACA Daily, Collector magazine and Pulse.

Advertising is available for companies wishing to promote their products or services. Be sure to visit the ACA Events Calendar on the Education and Training page to view our listing of upcoming CORE Curriculum and Hot Topic seminars featuring critical educational opportunities for your company.


Subscribe to ACA Daily NEWSROOM

Consumer Credit Card Spending and Debt Continue Steady Growth

Credit cards represent the largest consumer lending market in the U.S. as total outstanding balances, delinquencies and charge-off rates continue to rise at nominal rates, according to the Consumer Financial Protection Bureau’s Consumer Credit Market Report for 2017/18.

Congress requires the bureau to monitor the credit card marketplace and to produce a report on a biennial basis. This report, the bureau’s fourth, found that “market conditions remain stable as a result of low unemployment, modest wage growth and high consumer confidence … and late payment and default rates have risen modestly but remain below pre-recession levels,” according to a news release from the CFPB.

Debt collectors continue to play a role in this market as spending increases and consumers’ balances continue to roll over from month-to-month. According to the report, “in 2018 roughly 28% of consumers with a credit file had a ‘collections tradeline’ (i.e., an account that appears on a consumer’s credit report as a debt in collections) listed for a debt assigned to a third-party collector. Of these consumers, roughly 30% had at least one credit card tradeline assigned to a third-party debt collector.”

Overall, consumers’ total credit card balances reached about $900 billion by the end of 2018 compared to $792 billion before the recession.

The average general-purpose credit card (meaning cards accepted by a wide variety of merchants) balances for consumers with at least one card with a balance were roughly $5,700 at the end of 2018; the highest balance since the middle of 2009, according to the report.

According to the report, while credit card balances and spending continue to increase, the CFPB found that credit card issuers have lowered their daily limits on debt collection phone calls for delinquent credit card accounts since the last report was released in 2017.

“Average daily attempts remained well below these stated limits, which is consistent with findings from the 2017 report. Most issuers now supplement their internal collections communication strategy with email and text messages, but these channels are used primarily for account servicing and not for delivering required collections notices.

Issuers’ third-party collection networks typically do not use email and text,” the report states.

The bureau noted in the report that the Notice of Proposed Rulemaking to amend the Fair Debt Collection Practices Act addresses options for communications practices, including modern forms of communications such as email and text messages, and disclosures. (ACA International members may click here to find more information on the proposed rule and how to file comments before Sept. 18.)

Additional findings in the report include:

  • “Total outstanding credit card balances have continued to grow and at year-end 2018 were nominally above pre-recession levels. Throughout the post-recession period, including the period since the bureau’s 2017 Report, purchase volume has grown faster than outstanding balances.”
  • “After falling to historical lows in the years following the recession, delinquency and charge-off rates have increased over the last two years. Late payment rates have increased for new originations of general purpose and private label cards, both overall and within different credit tiers.” For example, the annual charge-off rates for general purpose cards increased in 2017 and 2018 and by the end of 2018 equaled 5.7% of balances.
  • “At $4.3 trillion, the aggregate of credit card lines extended (total line) is near its pre-recession high, while cardholding incidence remains further from its historic high.”
  • “Cardholders with prime or super prime credit scores (between 660 and 720 or greater) continue to account for most credit card debt and spending. However, in the last few years, the share of total credit card debt held by consumers with relatively lower credit scores has been increasing.”
  • “Cardholders with lower scores have also increased the average number of credit cards they hold. In addition, average credit card debt has risen faster for these cardholders over the last few years than it has for cardholders with higher scores, although all credit tiers have seen some growth in average outstanding balances. Aggregate credit card indebtedness for consumers with lower scores, however, remains below 2008 peaks.”

Read more findings in the Consumer Credit Market Report here.


Follow ACA International on Twitter @ACAIntl and @acacollector, Facebook and request to join our LinkedIn group for news and event updates. ACA International members are welcome to submit news items for possible publication to comm@acainternational.org. Visit our publications page for news submission guidelines and subscriptions to ACA Daily, Collector magazine and Pulse.

Advertising is available for companies wishing to promote their products or services. Be sure to visit the ACA Events Calendar on the Education and Training page to view our listing of upcoming CORE Curriculum and Hot Topic seminars featuring critical educational opportunities for your company.


Subscribe to ACA Daily NEWSROOM

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