Demand for credit cards remains relatively stable, and banks are introducing new technologies like AI and chatbots into the payments experience, according to the biennial Credit CARD Act report released by the Consumer Financial Protection Bureau today. The report included a section on credit card innovation that highlighted several ways technology has enabled consumers to access and manage their credit scores, compare credit card options and have greater control over card functionality.
Consumers opened roughly 106 million new credit card accounts in 2018, though new account volumes remained below pre-recession highs across all risk tiers, the report said. Using application volume as a measure, demand for credit cards reached their peak in 2016 and approval rates have become more stringent since then. Total credit card balances were around $900 billion at the end of 2018, surpassing pre-recession highs, and total credit lines across all consumer credit cards also approached a pre-recession high at $4.3 trillion.
Credit card delinquencies and charge-offs fell sharply since their recession-era peaks, and currently remain below pre-recession lows. Total cost of credit on revolving accounts increased since 2017, due in large part to rising interest rates. The cost increase was driven across all risk tiers by general purpose cards—which often have interest rates linked to the prime rate, the CFPB noted.
Rewards cards continue to account for a greater share of credit card spending and account for more than 60 percent of all originations, signaling that rewards factor significantly in consumers’ choice of credit card. Cardholders continued to prefer cash rewards over other rewards like points or miles.