Credit card use moderated in the first quarter of 2019, according to the American Bankers Association’s latest quarterly Credit Card Market Monitor. Compared to the previous quarter, seasonally adjusted purchase volumes declined across risk tiers. Compared to year-ago levels, purchase volumes rose among super-prime (+5.2 percent) and subprime (+4.3 percent) accounts and were essentially unchanged for prime accounts.
The August 2019 Monitor, which consists of credit card data from January through March 2019, also found that the total number of credit card accounts climbed 1.9 percent compared to a year ago, mostly due to growth in super-prime accounts, which have increased for 14 consecutive quarters and remain at record-high levels. The number of new accounts (those opened in the previous 24 months) fell by 5 percent on an annual basis. This decrease was driven by sharp year-over-year declines in new subprime (-10.3 percent) and prime (-7.5 percent) accounts. Average credit lines for all accounts increased modestly across risk tiers compared to last year’s fourth quarter, but remain well below recession-era peaks. Meanwhile, credit lines for new accounts were mixed, with credit lines for super-prime accounts falling 1.5 percent on a quarterly basis (their sharpest decline since 2012) while subprime credit lines increased modestly. “Weaker consumer spending and slower monthly job growth likely contributed to modestly lower monthly purchase volumes,” said Dan Smith, executive director of ABA’s Card Policy Council. “Issuers are also continuing their cautious approach in extending credit.” Consumers Maintain Prudent Credit Card Behavior The Monitor also found that credit card debt as a share of disposable income (seasonally adjusted) eased 3 basis points to 5.40 percent in the first quarter — essentially unchanged over the last five quarters and equivalent to levels from early 2013. “It is encouraging that credit card debt relative to income levels has remained low and steady as the economic expansion enters its eleventh year,” added Smith. “Consumers continue to be well-positioned to meet their financial obligations.” Meanwhile, the effective finance charge yield (which measures interest payments relative to total outstanding credit in the market) climbed 29 basis points to 13.33 percent. The effective finance charge yield has increased 224 basis points since late 2015, nearly identical to the 225-basis point increase in the federal funds rate over the same period. “The Fed’s benchmark rate is an important factor in determining interest rates, along with broader economic conditions and market trends,” said Smith. The share of Revolvers (those who carry a monthly balance) increased 0.1 percentage point to 44.5 percent, while the share of Transactors (those who pay their monthly balance in full each month) fell 0.3 percentage point to 30.1 percent, but remains near its highest level in more than a decade. The full report with detailed charts and statistics is available here. About the Credit Card Market MonitorThe American Bankers Association Credit Card Market Monitor is a quarterly report that provides key statistics on industry trends and relevant economic factors affecting the industry. The credit card data used in the report is taken from a nationally representative sample provided by Argus Information Services LLC. Credit card data are presented as national averages for all accounts based on actual credit card account information. No individual account holder’s information or specific financial institution’s data can be identified from the data set. Other data used in the report are taken from various public and private sources, including the Department of Commerce’s Bureau of Economic Analysis and the Federal Reserve. Answers to Frequently Asked Questions and definitions of the data presented in the ABA Credit Card Industry Monitor can be found in an Appendix attached to the monitor. Results of this and all previous reports can be found at www.aba.com. The American Bankers Association is the voice of the nation’s $18 trillion banking industry, which is composed of small, regional and large banks. Together, America’s banks employ more than 2 million men and women, safeguard nearly $14 trillion in deposits and extend more than $10 trillion in loans.