Credit Card Use Rebounds in Second Quarter

Credit card use rebounded in the second quarter of 2019, after moderating in the first quarter, according to the American Bankers Association’s latest Credit Card Market Monitor released today. Monthly purchase volumes increased across all risk tiers compared to the first quarter. Year-on-year, purchase volumes were up 5.5% among subprime accounts, 5.3% with super-prime accounts and 1.6% with prime accounts.

The total number of new accounts (opened in the previous 24 months) fell 2.5% compared to a year ago—the sixth consecutive annual decline—reflecting drops in new subprime and prime accounts, which fell to their lowest level in approximately four years. Meanwhile, the total number of credit card accounts rose 2.5% year-on-year, driven mostly by continued growth in the super-prime risk tier. Average credit lines for all accounts fell slightly for super-prime accounts, and increased slightly for prime and subprime accounts. All remained well below recession-era peaks.

“Consumer spending rebounded in the second quarter, and low unemployment and solid wage growth should keep consumers on solid footing through the end of 2019,” said ABA SVP Dan Smith. “At the same time, new account generation is moderating in the prime and subprime risk tiers as issuers take a more cautious approach as they monitor economic data.”

Outstanding credit as a share of disposable income increased four basis points to 5.33% in the second quarter, on par with a year ago. The share of account holders carrying a monthly balance fell 1.3% to reach the lowest level in two years. The share of account holders who paid off their balance in full each month rose to an all-time high of 31.1% since ABA began tracking this metric in 2008.