Credit Card Use Rises in Q4; More Customers Paid Off Balances in Full 

As credit card use picked up in the fourth quarter of 2019, a record share of consumers paid off their bill in full each month, according to ABA’s latest Credit Card Market Monitor released today. Monthly purchase volumes were up across all risk tiers compared to the previous quarter, particularly for super-prime accounts, which saw a 4% increase, and prime accounts, which rose 2.9%. Year-on-year, purchase volumes were up 5.8% for prime accounts, 5.7% for super-prime accounts and 2% for subprime accounts.

The share of account holders who paid off their balance in full each month rose to an all-time high of 31.9%, while the share of account holders carrying a monthly balance ticked up 0.2 percentage point to 44.1%. Outstanding credit as a share of disposable income fell 19 basis points in the fourth quarter to 5.5%.

The total number of new accounts (opened in the previous 24 months) fell in the fourth quarter, driven by a 1.6% drop in super-prime accounts and a 1.1% drop in prime accounts. New subprime accounts edged up 0.6% year-on-year. Meanwhile, the total number of credit card accounts also pulled back for the second consecutive quarter. Average credit lines grew across risk tiers for both new and total accounts in the fourth quarter, led by growth in prime credit lines.

ABA Senior Economist Rob Strand noted that the data show that consumers were generally well-positioned from a financial perspective prior to the outbreak of COVID-19 in the U.S. “Over the last several years, banks have been slowly bringing individuals who lost access to the credit card market in the aftermath of the last recession back into the fold with lower credit lines that could rise over time with good payment behavior,” Strand said. “While the COVID-19 pandemic has changed the underlying economic conditions and increased uncertainty, greater access to short-term financing provided by credit cards an help some consumers who face temporary income disruptions.”