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Research and Statistics

TransUnion data show credit availability is higher than ever

But due to a rise in delinquencies, issuers are increasingly risk averse

Summary

Take a look at TransUnion’s Q4 Industry Insights Report. The credit card industry is going strong, but there has been a significant rise in delinquencies.

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Credit card industry growth is still going strong, with new accounts climbing to an all-time high, according to a new report from TransUnion.

But credit card issuers are still closely controlling risk because delinquencies have increased, the credit bureau said.

The credit card industry is thriving

Credit card balances have grown year-over-year for 27 quarters in a row, reaching a high of $847 billion in Q4 2019, according to TransUnion’s Q4 Industry Insights Report.

And the average new account credit line has decreased from $5,247 in Q4 2018 to $5,214 in Q4 2019.

Data from Q3 2019 show consumers opened 18.6 million new accounts, a record for origination growth and the first time that number rose above 18 million.

The industry grew across most risk tiers compared with previous years:

  • In Q4 2019, the number of credit cards grew to 454.7 million from 429.8 million over the same time frame last year and 418.6 million in Q4 2017.
  • The rate of serious card delinquencies — payments that are 90 days late or more — rose significantly from 1.94% in Q4 2018 to 2.18% in Q4 2019.
  • The average card debt per borrower rose from $5,736 in Q4 2018 to $5,834 in Q4 2019.
  • Prior-quarter credit card originations grew from 16.4 million in Q4 2018 to 18.6 million in Q4 2019, another significant jump.

See related:Which debt to pay off first: Credit card, cash advance or personal loan?

Consumer demand plus new credit options equals healthy growth

“Rising consumer demand combined with new credit products available in the marketplace resulted in another healthy quarter of growth for the credit card industry,” Paul Siegfried, senior vice president and credit card business leader at TransUnion, said in a news release.

He also noted that because consumers are getting and using more credit, originations and balance growth are on the rise.

And Siegfried pointed out that the number of new private label accounts (individual retailer cards) has increased for two quarters now after two years of slowing down.

While serious delinquencies are on the rise, Siegfried suggested the trend could change in early 2020. He noted that missed payments typically increase in the fourth quarter and fall during the first quarter of the following year.

See related: ‘Supersize’ store cards let you pick from many retailers, but beware inflated APRs

Industry expert cautions consumers to prepare for a downturn

Ted Rossman, industry analyst at CreditCards.com, noted that the unemployment rate is near a 50-year low, so consumer confidence is elevated.

But what will happen during a downturn?

Some issuers are taking proactive defensive measures to avoid overextending themselves, Rossman noted.

“I worry, at the household level, that many people are failing to make enough progress paying down their credit card debt – our recent Bankrate.com survey found about two-thirds of credit card debtors owe at least as much now as they have over the past decade,” Rossman noted.

Just keeping up with minimum payments isn’t enough, especially with credit card rates near record highs.

Take advantage of these good economic times to pay down your debt, Rossman suggested.

Strategies could include balance transfer cards (with 0% APRs lasting up to 21 months), taking on a side hustle, selling unneeded possessions and cutting expenses.

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The editorial content on this page is based solely on the objective assessment of our writers and is not driven by advertising dollars. It has not been provided or commissioned by the credit card issuers. However, we may receive compensation when you click on links to products from our partners.

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Credit Card Rate Report Updated: July 2nd, 2020
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