Smart Borrower Blog

Average Credit Card Debt Tops 6-Year High


May 10th, 2018 @ 9:01 PM by Amber Nelson


Americans are using their credit cards and spending more today than they have in years, according to data from consumer credit reporting agency TransUnion, and credit card delinquencies are at 6-year high.

Total active U.S. credit cards accounts rose to 416.5 million, up 2.6% in the first quarter of 2018 from a year earlier. The average credit card debt per borrower also rose to $5,472 in the first quarter, the highest level in six years, yet TransUnion’s senior vice president and credit card business leader Paul Siegfried is not yet ready to sound the alarm yet.

“Though delinquency rates are certainly rising, there are several reasons we do not believe this is a worrisome trend at this juncture,” Siegfried said. He added, “If you look at total consumer debt as a percentage of income, this is what I would consider to be an average time. If you were to see that number going dramatically up and unemployment numbers not changing, that might be alarming. We see the employment numbers improving.”

The 90-day delinquency rate for the first quarter of this year was 1.78%, up from 1.69% a year ago. Siegfried also had an explanation for this high. Even though they are improving, employment challenges still exist as the economy continues to recover. “Total employment is not in a robust zone. If incomes are not going up and employment is not going up, we would expect to see some growth in delinquencies,” he said.

On the bright side, Siegfried noted, credit card lenders are in a “race to quality,” increasing their new accounts with good credit borrowers. The number of new card accounts made to those with “super prime” credit in the 2018 first quarter jumped 4.9% from the previous year and 3.2% for those with “prime plus” credit profiles. The number of accounts created for those in the lower brackets of credit scores fell 2.7%.

“The lenders are very diligent with their processes; they’re far more sophisticated than they were 20 years ago,” Siegfried commented. “They tend to manage the business closely.”

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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