Spending more in advance of holiday gifting means putting more on more credit cards. According to a new TransUnion study, retailers’ private-label credit cards are about to see a twofold spike this holiday season.
The number of customers with private-label cards has grown year over year, especially in the last quarter of the year. In fact, the new study said that, while more consumers opt to open private-label credit cards during their holiday shopping, certain retailers — especially discount, online and jewelry companies — will see that number double.
The reason? A stronger economy plus increased consumer access to these cards during the holidays, bundled with the allure of special discounts and deals — online and in-store.
“The primary beneficiaries from a retail standpoint include online retailers, jewelry stores and big-box discounters, who often create enticing offers for prospective shoppers,” said Nidhi Verma, senior director of research and consulting for TransUnion. “As consumers spend more time online, it is natural for online retail cards to experience increasingly larger volumes of account openings during the holiday shopping season.”
Looking back at previous Decembers, in 2014, there were 123.7 million consumers with retail card credit, and in 2015, there were 124.8 million. Tallying up the first three quarters of this year, the number of consumers with retail card credit stands at 125.3 million before the holiday shopping season has even fully kicked in.
What’s in these consumers’ wallets? TransUnion said that about a third of consumers’ wallets are comprised of department store credit cards.
And so, with more cards and more spending, that means bigger balances. The TransUnion study said that credit card debt will grow past the end of 2016 and into 2017 and ultimately level off higher than 2015’s amounts. The study added, however, that delinquency rates will remain low.