Consumer Finance

Data Shows Credit Card Usage On The Rise As Delinquency Rates Climb

A new report from TransUnion shows that credit card usage continued to rise, as delinquency rates per borrower also increased.

The Q1 2018 Industry Insights report revealed that the number of credit card accounts rose 2.6 percent in the last year to 416.5 million in Q1 2018, an increase from 405.8 million in Q1 2017.

In addition, the number of consumers with access to a credit card increased by 2.1 percent to 174.9 million, up from 171.4 million one year ago.

The report also found that serious credit card delinquency rates per borrower (90+ DPD) increased in Q1 2018 to 1.78 percent, up from 1.69 percent in Q1 2017. That means the delinquency rate is now level with the 1.77 percent mark observed in Q1 2012, but it remains below the 10-year first-quarter average of 1.91 percent.

And as credit card usage increased, so did delinquencies during the last year, up 2.63 percent to $5,472 in Q1 2018.

“Though delinquency rates are certainly rising, there are several reasons we do not believe this is a worrisome trend at this juncture,” said Paul Siegfried, senior vice president and card and payments business leader at TransUnion. “First, credit card issuers have been relatively conservative over the last five quarters, issuing more credit to lower-risk consumers compared to higher-risk consumers. Second, the credit limits they are extending to consumers in most risk tiers are generally lower than those they had issued in prior years. Finally, we believe it’s a positive sign for the economy that more consumers have access to credit and that delinquency rates, while growing, are doing so at a slow pace and remain below levels observed immediately post-recession.”

When comparing generations, TransUnion found the most balance growth on a percentage basis from Gen Z and millennials, while Gen X borrowers had the highest credit card balances.

“Credit cards are a vital part of the consumer credit economy, and their continued good performance bodes well for other credit products such as auto loans and mortgages. It’s also a good indicator of the product’s popularity that the youngest generations continue to grow their card balances and generally appear to manage their debts effectively,” said Matt Komos, VP of financial services research and consulting at TransUnion. “In line with our forecast for the year, the consumer credit market continues to perform well, and we do not see any indicators of concern in the short- or mid-term.”

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