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accounts – those that consumers with the best credit hold – saw record purchase volume growth
of 10 percent in the third quarter of 2018, according to the American Bankers
its January 2019
Market Monitor, the ABA found consumers used their credit cards more
during 2018’s third quarter, year-over-year.
Purchase volumes for super-prime
accounts grew significantly, increasing the strongest
year-over-year in almost eight years. Purchase volumes for subprime accounts
also rose, but they stayed the same for prime accounts.
numbers rose, but more slowly
ABA data also showed that the total number of credit card accounts rose during
the same period of time – from July through September 2019 – only more slowly
new accounts, which the ABA defines as cardholders opening in the “previous 24
months,” decreased almost 6 percent from just a year ago, with a serious
downturn in consumers opening fresh prime and subprime accounts.
super-prime accounts’ average credit lines remained the same, prime and subprime
average credit lines rose on a quarterly basis. New subprime accounts’ average
credit lines rose by 2.4 percent from 2018’s second quarter. New prime
accounts’ average credit lines fell by 0.9 percent and super-prime average
credit lines fell by 1.2 percent since the second quarter.
spending remains a major bright spot in the U.S. economy, and elevated consumer
confidence levels coupled with stronger wage growth should keep spending
healthy, at least through early 2019,” Jess Sharp, executive director of ABA’s
Card Policy Council, said in a news release.
the same time, there is evidence that issuers may be starting to pull back a
bit. Tapping the brakes is an indication that issuers have their eye on the
ball and are trying to help consumers continue to effectively manage their
credit,” Sharp added.
See related: Fed: Card balances jumped by $4.8 billion in November
Number of ‘transactors’ fell in third quarter
share of transactors – those who pay their balances in full each month – fell
0.2 percentage point to 30.2 percent in 2018’s third quarter. However, 30.2
percent is still the second highest number since 2008, when the ABA started tracking
accounts’ share fell to 25.6 in the third quarter as well, a 10-year low. And
revolvers – those who keep a monthly balance on their cards – increased their share
to 44.1 percent, a 0.4 percent increase from the second quarter.
Interest payments relative to card debt rose slowly
quarter three, credit card credit outstanding as a share of disposable income ticked
up to 5.42 percent (.04 percent), but has not grown a lot over the last six
years and remains 2-3 percentage points below where it was before the Great Recession.
addition, the Fed’s
interest rate increases have raised the effective finance charge yield – which
shows interest payments relative to the market’s total outstanding credit. But
the yield increased more slowly than the Fed’s rate – it rose by .24 percent to 12.8 percent in the third quarter. This might mean that as consumers better
manage their credit card debt, it somewhat offsets interest rates that are
card interest rates are reflective of broader economic trends, including
changes to the federal funds rate, so it is not surprising that the effective
finance charge yield is rising,” Sharp said.