TransUnion reports that new credit card accounts have reached an all-time high, indicating continued growth in the credit card industry. However, credit card issuers are also closely managing risk due to an increase in delinquencies.
The credit card industry is flourishing, with credit card balances increasing year-over-year for 27 consecutive quarters and reaching a peak of $847 billion in Q4 2019, according to TransUnion’s Q4 Industry Insights Report. Although the average new account credit line decreased from $5,247 in Q4 2018 to $5,214 in Q4 2019, Q3 2019 data indicate that consumers opened a record-breaking 18.6 million new accounts.
The industry expanded across most risk tiers compared to previous years, with the number of credit cards increasing from 429.8 million in Q4 2018 to 454.7 million in Q4 2019. However, serious card delinquencies, defined as payments that are 90 days late or more, rose significantly from 1.94% to 2.18% between Q4 2018 and Q4 2019, and the average card debt per borrower increased from $5,736 to $5,834 during the same period.
The prior-quarter credit card originations grew from 16.4 million in Q4 2018 to 18.6 million in Q4 2019, indicating another significant increase.
Consumer demand and new credit options drive healthy growth in credit card industry
According to a news release by TransUnion, Paul Siegfried, senior vice president and credit card business leader, attributed another quarter of healthy growth in the credit card industry to rising consumer demand and the availability of new credit products.
He noted that increasing credit availability has led to higher originations and balance growth. Siegfried also highlighted a recent increase in new private label accounts after two years of decline. Although serious delinquencies have increased, Siegfried suggested that the trend may reverse in early 2020 since missed payments typically rise in Q4 and decrease in the following Q1.
Industry analyst urges consumers to prepare for economic downturn
Ted Rossman from CreditCards.com has cautioned that while consumer confidence is currently high due to a low unemployment rate, it is important to prepare for a possible downturn. Some credit card issuers are already taking defensive measures to avoid overextending themselves. Rossman expressed concern that many people are not making enough progress paying down their credit card debt, and relying on just making minimum payments may not be sufficient, especially with high interest rates. He advised consumers to use the current good economic times to pay down their debt, suggesting strategies such as balance transfer cards, taking on side hustles, selling unnecessary items, and cutting expenses.
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While it’s exciting to see credit availability at an all-time high, we should approach this news with caution. It’s important to remember that credit should be used responsibly and not as a crutch to overspend.
Woohoo! Credit availability has hit a new high! Time to go out and spend all that money we don’t have, am I right? But seriously, we should all be careful not to get too carried away.
While there are certainly risks associated with increased credit availability, this is also an opportunity for individuals and businesses to invest in their futures. By using credit responsibly and investing in growth, we can all work towards a stronger and more prosperous future.
The fact that credit availability has reached an all-time high is a sign that the economy is recovering and businesses are investing in growth. This bodes well for job creation and a stronger overall economy.
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Romance blooms, love unfolds,
The sun rises, a new day begins,
Ugh, I can’t seem to shake this bad mood.
Oh great, just what we need – more credit available for us to rack up debt and stress about. Maybe we should all just move to a cash-only system and avoid this mess altogether.
While some may be concerned about the implications of increased credit availability, this is actually a good thing. It means that banks and other lenders are confident in the economy and are willing to lend money to consumers and businesses.
The fact that credit availability has reached an all-time high is just another indication of our society’s addiction to debt. We’ll never learn, will we? Just keep borrowing and spending until the whole system collapses.
The fact that credit availability has reached an all-time high is alarming. It suggests that lenders are taking on more risk and may be extending credit to individuals who can’t afford it. This could lead to another financial crisis if not addressed properly.
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Who cares if credit availability has reached an all-time high? It’s not like we’re all going to run out and max out our credit cards. People need to take responsibility for their own finances and not blame the banks for their own bad decisions.
Oh, I need to do laundry.
The TransUnion data showing that credit availability has reached an all-time high is a clear sign of the recovering economy. This will likely lead to increased consumer spending and stimulate further economic growth.