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For Immediate Release
August 4, 2016
ABA Media Contact: Jeff Sigmund
(202) 663-5439
Email: jsigmund@aba.com
Follow us on Twitter: @ABABankers

ABA Report: Consumer Spending Drives Credit Card Market Expansion in First Quarter

 

​WASHINGTON — Healthy consumer spending and a tightening labor market helped drive an expansion of the credit card market in the first quarter, according to the American Bankers Association’s latest Credit Card Market Monitor report.
 
080416CreditCardMonitorpic.JPGDespite sluggish 0.8 percent growth in the overall economy, credit card monthly purchase volumes jumped 10.1 percent for subprime accounts, 8.9 percent for prime accounts and 9.9 percent for super-prime accounts compared to the same period a year earlier. Although purchase volumes dipped relative to the fourth quarter of 2015, this year’s post-holiday season decline in credit card use was smaller than usual.
 
The August 2016 Monitor, which reflects credit card data from January through March, also found that the number of new credit card accounts (those opened in the preceding 24 months) rose to 83.5 million, up 13.0 percent from a year earlier.  This increase was driven primarily by growth in the prime and subprime risk tiers, which rose 14.2 percent and 26.2 percent year-over-year respectively.  New subprime account openings increased to 26 million, but remain well below the pre-recession level of 35 million new accounts in the first quarter of 2008. Steady growth in new accounts resulted in a new post-recession high of 337 million total open credit card accounts.
 
“Credit card use is increasing in part because labor markets continue to improve,” said Jess Sharp, executive director of ABA’s Card Policy Council.  “Steady reductions in unemployment and faster wage growth have led to an increase in consumer spending.”
 
Consumers Well-Positioned to Manage Credit Cards
 
Although credit card use is rising, the ABA report found that consumers are keeping credit card debt at manageable levels. While the share of Revolvers (account holders who carry a monthly balance) rose 1.5 percentage points to 43.6 percent of all accounts, credit card credit outstanding as a share of disposable income fell to 5.18 percent — in line with post-recession lows.  Dormant accounts fell 0.6 percentage points to 27.5 percent of all accounts, while Transactors (account holders who pay their balance in full each month) fell 0.9 percentage points to 28.8 percent of all accounts.
 
“While more consumers are using credit cards for short-term financing, the amount of credit card debt they are carrying relative to their disposable income is quite low by historical standards,” said Sharp.
Issuers Adapt to Serve More Consumers
 
The latest report suggests that credit card issuers continue to look for opportunities to expand access to credit — particularly to millennials and other consumers who have lower credit scores or limited credit histories. Among new accounts opened in the preceding 24 months, the average credit line for subprime, prime and super-prime accounts increased 4.2 percent, 2.3 percent and 1.8 percent, respectively.  Among all accounts, the quarterly growth in subprime credit lines (+1.7 percent) was somewhat slower than in prime (+2.1 percent) and super-prime (+2.6 percent) credit lines, but was still the first subprime credit line expansion in three years.
 
“When people re-enter the work force and establish a good payment history, their credit scores improve,” Sharp said.  “As wages grow and the economy remains on solid footing, card issuers can be more confident in providing additional credit to those who have demonstrated the ability to meet their obligations.”
 
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 $16 trillion banking industry, which is composed of small, regional and large banks that together employ more than 2 million people, safeguard $12 trillion in deposits and extend more than $8 trillion in loans.
 
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