Credit card use continued to grow in the fourth quarter of 2017 on the back of a strong holiday season for consumer spending, according to the American Bankers Association’s latest quarterly Credit Card Market Monitor. On an annual basis, monthly purchase volumes rose 3.9 percent for prime accounts and 5.1 percent for super-prime accounts, but fell 3.0 percent for subprime accounts. Since mid-2015, monthly purchase volumes for prime and super-prime accounts have increased 16 and 19 percent respectively, but are up just 2.9 percent for subprime accounts over the same period.
The April 2018 Monitor, which consists of credit card data from October through December 2017, also found that the number of
new accounts (those opened in the previous 24 months) declined compared to the previous quarter for the first time in nearly five years (though new account opens rose slightly on a year over year basis). The total number of open credit card accounts expanded in the fourth quarter, but at the slowest pace in nearly three years.
Credit card credit outstanding as a share of disposable income increased 13 basis points to 5.73 percent in the fourth quarter, consistent with seasonal spending patterns. This metric remains well below pre-recession levels and is essentially unchanged from where it stood in late 2011 and early 2012.
“Consumers have worked hard to ensure credit card debt remains at manageable levels,” said Jess Sharp, executive director of ABA’s Card Policy Council. “Even as spending levels increase, credit card debt as a share of disposable income remains low by historical standards.”
Consumers Continue to Carefully Manage Credit Card Debt
Data from the fourth quarter also show that credit card users were slightly more active, with the share of Dormant accounts falling 0.6 percentage point. Meanwhile, the share of Transactors (those who pay their monthly balance in full each month) increased 0.4 percentage point to 29.5 percent of all accounts, while the share of Revolvers (those who carry a monthly balance) rose 0.3 percentage point to 44.0 percent — the same level at which it started 2017.
Average credit lines among all accounts rose across risk tiers compared to the previous quarter, but remain well below post-recession highs, particularly for prime (26 percent lower) and subprime (23 percent lower) accounts. Among new accounts, average prime and subprime credit lines increased to levels not seen since 2010, while super-prime credit lines are now above 2008 levels.
“The economy is performing well, and consumers are benefitting,” Sharp said. “The strong labor market is helping to drive consumer confidence levels near all-time highs, and card issuers are responding by judiciously expanding credit access to new and existing customers.”
The full report with detailed charts and statistics is available here.
About the Credit Card Market Monitor
The 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 $17 trillion banking industry, which is composed of small, regional and large banks that together employ more than 2 million people, safeguard $13 trillion in deposits and extend nearly $10 trillion in loans.