Study: Consumers Continue to Spend Using Credit Cards


11/21/2017 3:36 PM

TransUnion’s latest industry insights report shows increasing balances, but lower account originations compared to 2016.

News

Consumers, especially those with new access to credit cards, continued to rack up balances on their accounts, according to TransUnion’s Industry Insights Report for the third quarter 2017.

Total credit card balances increased 7 percent to $731 billion in the third quarter this year, compared to $683 billion in the third quarter 2016, according to a news release from TransUnion.

While balances are growing, new accounts continue to decline.

“The third quarter of 2017 exhibited a lending market that continued to operate in a stable manner, with consumers continuing to gain access to credit and take advantage of that access,” Ezra Becker, senior vice president and head of research and consulting for TransUnion said in the news release. “However, we are beginning to see a slowdown in originations, which may be a signal of saturation in the lower-risk credit tiers and some pullback in lender risk appetite in the higher-risk tiers.”

The number of new credit card accounts declined 12.1 percent between the second quarter 2016 and the second quarter this year (originations are viewed one quarter in arrears to ensure all accounts are included), according to TransUnion.

However, those consumers who did open a new account in the last year are contributing to the increase  in balances.

“The robust increase in credit card balances is a reflection of new account growth observed in 2016. Consumers with new access to credit cards clearly used them and built balances,” Paul Siegfried, senior vice president and credit card business leader at TransUnion said in the news release.Not surprisingly, subprime consumers experienced the largest annual increase in serious delinquency rates, though we also observed new account balance declines in this group as well. Overall, the market is performing in line with our expectations at the beginning of the year and we do not anticipate any marked changes to this sector at the end of the year.”

Consumers’ serious delinquency rates, meaning they are 90 or more days past due on their account, increased to 1.68 percent in the third quarter compared to 1.53 percent in the third quarter last year. However, the delinquency rates are “relatively low” compared to past figures and in line with TransUnion’s prediction of a 1.65 percent year-end delinquency rate, according to the news release.

TransUnion also reports that 195.9 million consumers have access to revolving credit, including bank-issued and private label credit cards, and 142.5 million consumers had a non-revolving loan (including student loans, auto loans, mortgages and unsecured personal loans) in the third quarter.

“The number of consumers with the aforementioned credit products, especially revolving lines of credit, will more than likely grow during the upcoming holiday shopping season,” according to the news release.

Additional findings in the report include:

  • The average debt per borrower in third quarter 2017 was $5,483, compared to $5,323 in the second quarter.
  • Members of Generation X (1965-1979) have the highest average loan balance per consumer, $6,997, and a delinquency rate of 2.1 percent. Baby Boomers have the second highest average loan balance per consumer, $6,351, and a delinquency rate of 1.1 percent.
  • Millennials’ average loan balance per consumer is $4,028.
  • Members of Generation Z (1995-present) have the lowest average balance per consumer$1,101, but the highest delinquency rate, 2.55 percent.

View the complete Industry Insights Report on TransUnion’s website.

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