Credit Card Market Expands in Fourth Quarter

New credit card accounts totaled 88.1 million in the fourth quarter of 2016, according to the latest edition of ABA’s Credit Card Market Monitor released today. Monthly purchase volumes continued to increase between 5 and 10 percent across all risk tiers (subprime, prime and super-prime), though the data suggested that Americans are effectively managing their credit card debt.

“This report continues a pattern that we’ve seen over the last few years,” said Jess Sharp, executive director of ABA’s Card Policy Council. “Millions of Americans who faced challenges during and after the recession are back on their feet, while younger Americans who struggled to enter the workforce during the recession’s aftermath have been helped by improved labor conditions. As a result, both groups are well positioned to benefit from a credit card account and build credit.”

Credit access continued to expand in the fourth quarter, with all three risk tiers seeing year-over-year increases in the total number of accounts. Average credit lines also rose across all risk tiers; among new accounts, super-prime cardholders’ average credit lines rose 2.7 percent, while prime and subprime credit lines increased 2 percent and 1.1 percent, respectively.

Outstanding credit card debt as a share of disposable income ticked up slightly, due in part to seasonal factors, but remained near post-recession lows at 5.46 percent. The share of account holders carrying a monthly balance rose 0.4 percent to 43.7 percent of all accounts, while the share of account holders paying off their balances each month dipped 0.1 percent to 29.1 percent.

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