Credit Card Use Continues to Expand in Third Quarter

Credit card use picked up in the third quarter of 2018, according to ABA’s latest Credit Card Market Monitor released today. Monthly purchase volumes for both subprime and super-prime accounts increased from the second quarter, but moderated for prime accounts. Year-on-year, purchase volumes we up 10 percent for super-prime accounts, 3.9 percent for prime accounts and 7.9 percent for subprime accounts.

The total number of new accounts (opened in the previous 24 months) fell nearly 6 percent year-on-year, reflecting sharp declines in new prime and subprime accounts. The total number of credit card accounts continued to rise, but growth was slower year-over-year. Average credit lines among accounts rose for prime and subprime accounts but remained unchanged for super-prime accounts.

“Consumer spending remains a major bright spot in the U.S. economy, and elevated consumer confidence levels coupled with stronger wage growth should keep spending healthy, at least through early 2019,” said ABA SVP Jess Sharp. “At the same time, there is evidence that issuers may be starting to pull back a bit. Tapping the brakes is an indication that issuers have their eye on the ball and are trying to help consumers continue to effectively manage their credit.”

Outstanding credit as a share of disposable income rose 4 basis points to 5.42 percent in the third quarter but remains well beneath pre-recession levels. The share of account holders carrying a monthly balance edged up 0.4 percent to 44.1 percent of all accounts, while those who paid off their balance in full dipped 0.2 points to 30.2 percent. The share of dormant accounts also fell slightly to 25.6, reaching a 10-year low.