Report examines expanding credit card use

Credit card use continued to expand in the fourth quarter of 2018, according to the American Bankers Association’s (ABA) latest quarterly Credit Card Market Monitor.

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“Consumers continue to exhibit good payment behavior overall, and issuers are responding by slowly increasing credit lines,” James Chessen, ABA’s chief economist, said. “At the same time, issuers are slowing the pace of new account generation, particularly for subprime and prime borrowers, as they continue to closely monitor economic trends and consumers’ financial health.”

The analysis showed in comparison to the previous quarter, purchase volumes increased for super-prime and prime accounts, but declined modestly for subprime accounts – revealing on an annual basis purchase volumes increased across risk tiers, particularly among subprime and super-prime accounts.

“Credit card debt remains very low relative to income, which demonstrates consumers’ diligence in managing their financial obligations,” Chessen said.

The Monitor also revealed credit card debt as a share of disposable income rose eight basis points to 5.50 percent in the fourth quarter, reflecting seasonal spending patterns, but is five basis points below its year-ago level.

The effective finance charge yield increased 24 basis points to 13.04 percent in the fourth quarter, mirroring the Federal Reserve Board’s interest rate hike in December that increased the cost of credit.