New credit card accounts rose 16 percent year-on-year in the second quarter to total 318 million, according to the latest edition of ABA’s Credit Card Market Monitor released today. While the growth was principally driven by prime and super-prime accounts, the report also cited a steady increase in subprime accounts, which saw a 32 percent year-on-year increase.
“As conditions improve, card issuers have responded by providing credit opportunities for more consumers,” said ABA SVP Jess Sharp. “[They] are finding new ways to meet the needs of millennials and other consumers with limited credit histories, as well as those who may have had difficulties managing their finances after the recession and are looking for a second chance.”
The report suggests that many card issuers are opting initially to extend smaller lines of credit rather than charging higher interest rates — the average credit line for new subprime accounts decreased 1.1 percent year-on-year, while credit lines for all accounts declined across all three risk categories.
Sharp also pointed out that consumers continue to manage credit and meet their financial obligations; outstanding credit card debt held steady at 5.3 percent, while effective finance charge yield fell to a new post-recession loan of 11.07 percent. The share of account holders carrying over monthly balances fell 1.3 points to 41 percent, while the share of accountholders paying off account balances in full increased 0.7 points to 29.6 percent, a post-recession high.
