CHICAGO—New credit growth for bank- and retail-issued cards is strongest among subprime borrowers, defined as consumers with Equifax Risk Scores of 660 or lower, according to the latest Equifax National Consumer Credit Trends Report.
Meanwhile, the number of credit card loans outstanding is at its highest point in five years.
Year-over-year increases in new credit originated for subprime borrowers year-to-date in July include:
- Bank-issued credit card limits: 43.5% ($8.83 billion to $12.68 billion, a six-year high).
- Bank-issued credit cards: 42.9% (6.88 million to 9.84 million, a six-year high).
- Retail-issued credit card limits: 16.2% ($5.91 billion to $6.87 billion, an eight-year high).
- Retail-issued credit cards: 12.8% (6.9 million to 7.8 million, an eight-year high).
“As the economy improves, consumers appear to be ready to expand, or in some case, rebuild their credit,” said Amy Crews Cutts, SVP/chief economist at Equifax. “New credit card accounts for those consumers with a subprime credit score have shown more than a 40% increase to date this year over the same time last year. This reflects both consumers’ appetite for new credit, and lenders’ willingness to offer it. Interestingly, balances for both subprime and prime have risen very little, suggesting that while consumers are positioning themselves for growth – they are also hesitant to take on new debt.”
Other highlights from the most recent Equifax data for bank-issued credit cards include:
- The total number of loans outstanding is more than 325 million, the highest in more than five years.
- The total card balances outstanding in September 2014 is $557.7 billion, the highest total in 44 months.
- The total number of new cards issued year-to-date in July 2014 is 28.8 million, a six-year high and an increase of 21.3% from same time a year ago.
- The total limit of new credit cards in that same time is $141 billion, a seven-year high and an increase of 27.8%.
- The write-off rate as a percentage of total balances outstanding in September 2014 is 3.48%, a decline of 15.9% from same time a year ago.
- The total balance of available credit is more than $2.56 trillion, a five-year high.
- Available credit, which is the difference between the total credit limit and balances, in September 2014 is higher than $2 trillion for the first time since March of 2009.
- Utilization, which is the ratio of balances to the total credit limit, has remained less than 22% since the beginning of the year.
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