Consumers Are Spending More on Credit According to State of Credit Card Market Report
- January 10, 2018
- Posted by: Andrew Rombach
- Category: Credit Card News
The Consumer Financial Protection Bureau (CFPB) recently released the report it compiles every two years on how the credit card market is performing. This report offers key statistics about the market. According to the report, average credit card debt, usage of online services, how many accounts there are, and the limit of credit lines have all been on the rise since the last report.
The report showed consumers overall held less credit cards than they did before the latest recession. In addition, more consumers are opting to sign up for cards that must have a cash deposit before using. It also indicates that consumers are spending more on credit and taking on more debt.
Additional Findings in the Report
Since the last time the report was prepared in 2015, interest rates and fees have remained comparable, which is good news for consumers.
This is the third report released by the CFPB, and experts can use it to take a closer look at how the economy is recovering from the last recession in 2007, as well as infer some information about consumer confidence.
This report showed new credit cards were issued more frequently in 2016 than in any other year since 2007. Approximately 110 million new cards were issued. That’s around a 50 percent gain compared to 2010. However, new accounts are still down compared to pre-recession levels.
During the past two years, the average credit card debt grew by 9 percent. But those with low subprime credit scores didn’t fare as well when it came to how much money they owed. Their average debt saw more of a hike – it was a 26 percent growth, compared to the 9 percent by the other consumers.
Out of all active credit cards, more than 60 percent of card holders are using online services. They use these services for a variety of reasons, including bill paying, watching spending, and viewing their statements.
The number of credit cards the average consumer holds now is less than it was before the recession. Those who have prime scores or higher now average four credit cards, which is one less than the five they had on average pre-recession.
Secured cards, which are credit cards that need a cash deposit, are growing in popularity with subprime card holders or those who have yet to build their credit score. The number of secured cards issued increased by 7 percent from 2015 to 2016 for mass market issuers.
Secured cards are an attractive option for those with bad credit or no credit because it can help them improve their credit score. That can help them lend better interest rates on loans in the future, as well as help them secure bigger loans for automobiles and homes.
Why This Report Is Completed Every Two Years
Because the credit card market is immense and impacts the financial health of many citizens, Congress requires the CFPB to do this biennial report to keep abreast of any developments or changes in the credit card market.