Smart Borrower Blog

New Credit Card Accounts Hit 6-Year High


Nov 25th, 2015 @ 7:41 AM by Amber Nelson


Credit card issuers originated 15.2 million worth of new credit card accounts during the third quarter of this year, the highest level in six years, according to a new report from credit agency TransUnion.

Credit card originations were also up 12.2 percent from the 2015 second quarter. “Credit card originations are increasing at a faster pace in the last year, indicating that consumers have an appetite for credit,” said Paul Siegfried, senior vice president and credit card business leader for TransUnion. Plus, the number of consumers with credit cards rose to 130.8 million in the third quarter, up 4.3 percent from 125.4 million a year earlier.

A significant part of the rise in credit card issuance is the increased credit access for subprime borrowers. The number of subprime consumers (those with TransUnion credit scores of 660 or below) with credit cards jumped 25.3 percent to 33 million in the third quarter. The average credit line for subprime borrowers increased 0.7 percent to $995 during the second quarter.

“Card issuers are seeking opportunities to lend to non-prime consumers, and are slowly opening up credit to these consumers,” said Siegfried. “Despite non-prime consumers increasingly gaining access to credit cards, balance delinquency rates remain steady.”

Credit card delinquencies did rise significantly in the third quarter, climbing 7 percent to 1.43 percent, from 1.34 percent, but TransUnion points out that the new rate is still half the 2.76 percent rate from the depth of the Recession in the 2009 third quarter. The rate also remains low compared to historical averages.

“The growth in total bankcard balances, combined with stable delinquency levels, indicates consumers are comfortable with and willing to use their credit cards,” Siegfried said. “The current credit card environment also suggests a stabilization in the supply and demand equilibrium for credit.”

About Amber Nelson
Amber Nelson is a seasoned mortgage industry writer and a regular contributor to Loan.com and Mortgage101.com.

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