Credit Card Market Moderates in First Quarter

Credit card use in the first quarter of 2018 declined from the previous quarter, according to the latest edition of ABA’s Credit Card Market Monitor released today. Monthly purchase volumes were down 4 to 6 percent across all risk tiers from the fourth quarter but were up year-on-year; purchase volumes for super-prime accounts were up 8.9 percent from a year ago, while prime accounts saw a 6.2 percent increase and subprime accounts saw slower year-on-year growth at 2.1 percent.

The total number of new accounts was also down, due in large part to a 6.3 percent drop in new subprime accounts. This year marks the first year-on-year decline in new accounts in nearly seven years. The total of all open credit card accounts expanded year-on-year, but at its slowest pace in more than five years. Average credit lines rose across risk tiers from the fourth quarter but remained well below recession-era highs.

“As the economy continues to expand at a solid pace, sustained job growth is pulling working-age Americans off the sidelines and back into the labor market,” said ABA SVP Jess Sharp. “Now that they’re working again, these consumers are better positioned to manage credit, and card issuers are responding by increasing credit access with lower credit lines that can rise over time with a good payment history.”

Outstanding credit as a share of disposable income fell 21 basis points to 5.52 percent, the largest quarterly decrease since 2014. The share of account holders carrying a monthly balance increased 0.8 percent to 44.8 percent of all accounts, while those that paid off their balance in full remained unchanged at 29.5 percent. The share of dormant accounts fell 0.7 percent to 25.8 percent.