New credit card account volume increased 14 percent year-over-year in the first quarter across all risk categories, according to a report released this week by the American Bankers Association (ABA).
The industry’s total 314 million credit card accounts hit a peak not seen since late 2008 and while most of the growth was driven by increases in the prime and super-prime categories, the number of subprime accounts hit 60 million for the first time in more than three years, according to the ABA’s Credit Card Market Monitor.
“Banks continue to create opportunities across all categories with a prudent approach that opens the door for millennials with no credit history as well as those who have had difficulty managing credit in the past,” Chief Economist James Chessen said in a statement. “By offering lower initial credit lines that can increase over time with a good payment record, card issuers have responsibly expanded access to credit cards in a manner that benefits both consumers and the broader economy.”
While outstanding credit card credit as a share of disposable income increased 0.1 percent in the first quarter, it remained near historic lows, the ABA said in its report.
Furthermore, monthly purchase volumes declined about 8 percent across all three risk categories in the first quarter, following what the organization described as a normal seasonal purchasing pattern.
Finally, average credit lines for all accounts fell on a quarter-over-quarter across all risk categories, with a 2.1 percent decline among subprime accounts leading that trend. The average subprime credit line was $3,536, the average prime line was $7,076, and the average super-prime credit line was $11,006.
“The weak economic conditions in the first quarter likely exacerbated the normal decline in credit card activity that occurs after the holiday shopping season,” Chessen said. “We’ve seen similar first-quarter declines due to these types of seasonal and one-off economic factors over the last few years. We remain confident that credit card markets will expand as the labor market tightens and gas prices continue to fall, which should drive up wages and spur consumer spending.”
