The latest Credit Card Market Monitor report revealed credit card use continued to expand in the first quarter of 2017.
The American Bankers Association’s measuring unit determined monthly purchase volumes rose 3.3 percent on a year-over-year basis for prime and super-prime account holders, but dipped slightly for subprime borrowers.
“A stronger labor market continues to serve as a bright spot in the U.S. economy, putting more Americans in a better position to establish and build credit,” Jess Sharp, executive director of ABA’s Card Policy Council, said. “Issuers are responding to consumer demand by extending credit access to more people, but at lower credit lines that can increase over time with a good payment history.”
The report also found effective finance charge yield, which measures interest payments relative to total outstanding credit in the market, increased to 11.76 percent, up 28 basis points compared to the previous quarter.
“Market interest rates on loans tend to mirror what the Federal Reserve does, as the Fed’s goal is to tighten credit ever so slightly,” Sharp said. “Nonetheless, the effective finance charge is likely to remain well below post-recession highs this year.”
Analysts noted consumers continue to demonstrate good payment behavior even as credit card usage expands.