New credit card accounts rose 13 percent year-on-year in the first quarter of 2016 to total 83.5 million, according to the latest edition of ABA’s Credit Card Market Monitor released today. The total number of credit card accounts continued to climb to a post-recession high of 337 million. Healthy consumer spending and a tightening labor market contributed to the increase.
“Credit card use is increasing in part because labor markets continue to improve,” said ABA SVP Jess Sharp. “Steady reductions in unemployment and faster wage growth have led to an increase in consumer spending.” While more consumers are using credit cards for short-term financing, Sharp noted that the amount of debt carried relative to disposable income is low by historical standards, falling to 5.18 percent. The share of account holders carrying over a monthly balance increased 1.5 points to 43.6 percent of all accounts.
The report also suggests that card issuers are continuing to expand access to credit, particularly for millennials and consumers with lower credit scores or limited histories. New subprime lines of credit increased an average of 4.2 percent, compared to prime and super-prime lines, which grew at 2.3 percent and 1.8 percent, respectively. Among all accounts, subprime growth was slower at 1.7 percent, but marked the first overall expansion of subprime credit in three years.