Credit card ownership is rebounding, but remains far behind levels seen before the recession, and consumers with bad credit are the ones doing without plastic
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Credit card ownership is rebounding, but remains far behind levels seen before the recession, and consumers with less-than-stellar credit are the ones going without plastic, according to new research from the Federal Reserve Bank of New York.
Card ownership – consumers with at least one card – was 61 percent in the second quarter, down from a pre-recession peak of 68 percent reached in the second quarter of 2008. During the recession, ownership hit a low of 59 percent.
“About half of those borrowers with subprime scores have credit cards now, compared with more than 60 percent in 2007,” N.Y. Fed researchers wrote in a blog post analyzing the card market.
The analysis was released with the N.Y. Fed’s quarterly look at consumer credit, the Household Debt and Credit Report. The numbers come from a panel of about 5 million consumer credit reports from the credit bureau Equifax, which the researchers track anonymously.
The report paints a picture of a credit card market still in recovery from the worst general credit crunch since the Great Depression. The recession set off a wave of card cancellations, concentrated in low-score consumers. Some were voluntary, by cardholders suddenly leery of debt. Others were involuntary when card issuers canceled the accounts of high-risk or defaulting borrowers.
Ripples from that wave of cancellations can still be seen in the data released Tuesday. Those effects, though, are lessening.
“Lower-credit-score borrowers, once squeezed out of the market and paying down debt, are beginning to recover their ability to access credit with newly opened cards,” the researchers wrote.
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