Credit card monthly purchase volumes were mostly unchanged in the first quarter compared to the fourth quarter of 2020 but remained strong as consumers continued to drive the economic recovery, according to ABA’s latest Credit Card Market Monitor released today. Purchase volumes rose 1% for super-prime accounts in the first quarter from the last quarter, but dipped 0.8% for prime accounts and declined 1.3% for subprime accounts.
The share of account holders who paid their balance in full (transactors) each month declined 0.5 percentage point to 34.6%, remaining near a record high. The share of account holders carrying a monthly balance (revolvers) rose 0.8 percentage point to 40.5%, a record low. Meanwhile, credit card debt as a share of disposable income fell 70 basis points to 3.97%, a record-low, driven by a sharp increase in disposable income that was attributed to labor market improvements and economic impact payments.
“The data suggest consumers are managing their financial obligations well, in part due to federal relief efforts,” said ABA Chief Economist Sayee Srinivasan. “We expect credit to rise from all-time lows in the months ahead as the economy continues to normalize, and banks remain well positioned to meet the credit needs of their customers.”
The total number of new accounts (those opened in the previous 24 months) fell 4.6% from the prior quarter to the lowest level in seven years. New account volume dropped 23% over the last year with new subprime accounts falling by 34% during the same period. The total number of accounts declined to a four-year low, led by a decline in subprime accounts year-over-year.