ABA: Credit Card Use Expands in Third Quarter

Credit card use grew in the third quarter of 2019, according to the American Bankers Association’s latest Credit Card Market Monitor released today. Purchase volumes rose from the second to the third quarter for both prime and super-prime accounts, while dipping slightly for subprime accounts. Year-over-year, however, purchase volumes were up by 4.4% among super-prime accounts, 5.5% among prime accounts and 1.4% among subprime accounts.

The total number of new accounts (opened in the previous 24 months) fell year-on-year for the seventh consecutive quarter, driven mostly by declines in new prime and subprime accounts. Meanwhile, the total number of credit card accounts rose 1.7% year-on-year, driven mostly by continued growth in the super-prime risk tier. Average credit lines for all accounts increased across risk tiers.

“The rise in credit lines across risk tiers reflects a healthy financial base for consumers fueled by a solid labor market and rising wages,” said ABA Chief Economist James Chessen. “Consumers today have more resources, are better able to meet their obligations and are responsibly managing the greater flexibility that a slightly higher credit line provides.”

Outstanding credit as a share of disposable income fell two basis points to 5.31% in the third quarter, on par with a year before. The share of account holders carrying a monthly balance rose by 0.7 percentage points, remaining near a two-year low, while the share of account holders who paid off their balance in full each month remained near an all-time high of 31.1% since ABA began tracking this metric in 2008.