Consumers’ Credit Card Use and Access Reaches Record High

TransUnion’s latest Industry Insights Report shows the number of credit card accounts and consumers with access to credit surged in the first quarter this year.

5/14/2018 8:00 AM

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Consumers’ Credit Card Use and Access Reaches Record High

Credit card accounts and access are on the rise, especially in the last year, according to TransUnion’s Industry Insights Report for first quarter 2018.

“With more than 416 million credit cards and nearly 175 million consumers with access to them, credit card usage continued its upward trajectory in Q1 2018,” TransUnion reports in a news release.

Overall, it says credit cards “are still performing relatively well despite the continued rise in serious delinquency rates.”

The number of credit cards increased to 416 million from 405.8 million in the first quarter 2017. In that same timeframe, the number of consumers with access to a credit card also increased by 2.1 percent to 174.9 million up from 171.4 million in 2017.

Serious credit card delinquency rates per borrower (90 or more days past due) continue to increase since the first quarter 2015.

The rates increased to 1.78 percent in the first quarter this year, up from 1.69 percent in the first quarter 2017, according to the news release. They reached 1.5 percent in the first quarter 2016 and 1.38 percent in the first quarter 2015.

“The delinquency rate is now level with the 1.77 percent mark observed six years prior in Q1 2012, though it remains below the 10-year first quarter average of 1.91 percent,” according to Transunion.

But the trend is not cause for concern.

“Though delinquency rates are certainly rising, there are several reasons we do not believe this is a worrisome trend at this juncture,” Paul Siegfried, senior vice president and credit card business leader at TransUnion,” said in the news release. “First, credit card issuers have been relatively conservative over the last five quarters, issuing more credit to lower-risk consumers compared to higher-risk consumers. Second, the credit limits they are extending to consumers in most risk tiers are generally lower than those they had issued in prior years. Finally, we believe it’s a positive sign for the economy that more consumers have access to credit and that delinquency rates, while growing, are doing so at a slow pace and remain below levels observed immediately post-recession.”

Trends in average card debt per borrower are similar to the delinquency rates in the last year. The average debt per borrowing increased 2.63 percent to $5,472 in the first quarter 2018 compared to $5,332 in the first quarter last year. The increase started in the first quarter 2015 at $5,144 and jumped to $5,193 in 2016.

TransUnion also found the most balance growth on a percentage basis among consumers in Generation Z and Millennials. However, Generation X borrowers had the highest balances of any generation.

“Credit cards are a vital part of the consumer credit economy, and their continued good performance bodes well for other credit products such as auto loans and mortgages. It’s also a good indicator of the product’s popularity that the youngest generations continue to grow their card balances and generally appear to manage their debts effectively,” Matt Komos, vice president of research and consulting at TransUnion, said in the news release. “In line with our forecast for the year, the consumer credit market continues to perform well, and we do not see any indicators of concern in the short- or mid-term.”

Access to the complete Industry Insights Report is available on TransUnion’s website.

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