Credit card debt rises but Americans possess fewer cards
The CFPB’s biennial report also reveals secured credit cards are favorable among younger people.
U.S. consumers’ average credit card debt, total permitted credit line, number of accounts and enrollment in online services have all grown post-recession, according to a new biennial financial market report.
The Consumer Financial Protection Bureau (CFPB) recently released findings from its latest report on the state of the U.S. credit card market. Most indicators remained largely stable since the last report in 2015.
However, one revelation is that cardholders now average fewer credit cards than before the recession in 2008. Approximately 169 million consumers had at least one credit card as of mid-2017. Cardholders with prime scores or better hold an average of more than four cards now, compared with more than five pre-recession.
The popularity of secured credit cards – cards that require a cash security deposit – have also enjoyed gains. The CFPB says secured cards are frequently used to build credit history. For mass market issuers, the number of new secured cards rose 7% year-on-year in 2016, driven by consumers with severely poor or no credit score.
It seems secured credit cards are favorable among younger people, particularly those aged 21-34, with originations for those in this age bracket rising around 7% between 2015 and 2016.
The average credit card debt of U.S. cardholders jumped up 9% over the last two years. Average balances for cardholders with low credit scores rose at even faster rates. Cardholders with deep subprime credit scores, for example, suffered a one quarter (26%) increase in their average credit card debt over the last two years.
Americans opened 110 million new credit card accounts in 2016. This is around 50% more than in 2010 and higher than any year over the last decade. However, new account volumes remain below pre-recession levels.
The report found that consumers also racked up $4 trillion in card credit line, used or unused, by mid-2017. A credit line is the total amount of debt permitted to incur on an account. Since 2009, there have been consistent increases in credit line for every credit tier. However, credit line debt is below the mid-2008 high of $4.4 trillion.
Beginning in April 2018, three big credit card companies will eliminate the need to sign for purchases in the United States and beyond. The move comes as payment processes grow faster, convenient and more secure.
Several competitors have tried and failed to create a single smart credit card that can digitally switch between all of your different accounts, eliminating the need to carry a wallet full of them. But EDGE isn’t giving up.
To help you find the right credit card, we’ve listed comparisons by card type, card features, and card provider.