The cost of credit in the credit card market has held steady since 2015, though interest rates have risen as market rates have increased, according to a new, 350-page study from the Consumer Financial Protection Bureau.
The total amounts of credit lines and the number of new card originations increased during that timeframe, but remain well below pre-crisis highs, the study noted. The average credit card debt increased 9 percent over the last two years. Delinquencies and chargeoffs ticked up slightly, though they also remained well below pre-recession highs.
The study also found that cardholders today are averaging fewer credit cards than they were in the pre-crisis years and that non-prime consumers are relying more on private label cards and secured cards, which require a cash deposit. The issuance of secured cards ticked up 7 percent in 2016.
The CFPB also noted that rewards programs are becoming more popular among credit card users, and more broadly adopted by card issuers. While the CFPB has previously raised concerns about rewards programs, it acknowledged several practices the American Bankers Association outlined in a recent comment letter that, the report noted, “if universally adopted in the collaborative and constructive spirit of the letter, would address at least some of these concerns.” These practices include ensuring consistent consumer access throughout the lifetime of their relationship with the card issuer; making rewards program features easy to select and activate; presenting terms in a clear, transparent manner; and raising awareness about reward expiration or point forfeitures. For more information, contact ABA’s Brian Murphy or Nessa Feddis.