Americans Have Over $4 Trillion in Open Credit Card Lines, According to New Report
On Wednesday, the Consumer Financial Protection Bureau (CFPB) released its biennial report to Congress covering the credit card market, and its findings show that the market is on the up-and-up. In addition to the total number of credit card accounts increasing, so has the total credit available to cardholders and the average amount of debt over the past two years.
The CFPB report states that the credit card market has grown in size, as well as in its number of participants, offerings and features of its products. Some of the major findings from the report include:
- Total amount of credit line on cards (used or unused), is still below recession levels, but has steadily increased since 2009. As of 2017, credit card companies extended more than $4 trillion in credit lines as of mid-2017.
- In 2016, consumers opened about 110 million new credit card accounts which is about 50% higher than 2010 and higher than any single year since 2007.
- The average cardholder has fewer credit cards than before the financial crisis, but the number of cards in people's wallets have increased in recent years.
The CFPB report also shows that, during the same time period, the delinquency and charge-off rates increased modestly. Both rates were high during the financial crisis between 2007 and 2009 and then fell to "historic lows in the years following the recession." according to the CFPB report. Even though the increase in delinquencies is not huge, "it is a troubling sign," says Bruce McClary, vice president of communications at the National Foundation for Credit Counseling to NBC News. "There's nothing wrong with using a credit card, which be a useful financial tool, as long as you make payments on time and avoid going deep into debt," he added.
The report also found that the average credit card debt increased 9% since 2015 and the average balance for cardholders with low credit scores rose at a faster rate; those with really bad credit history saw a 26% increase in their average credit card debt since 2015.
The average American household with credit card debt has a balance of $15,654, according to a report by NerdWallet. Last week, the national average APR hit 16.21%, according to the latest report from creditcards.com, which is the highest average APR recorded since the website started tracking in mid-2007.
Creditcards.com also predicts that as the Federal Reserve continues to boost interest rates, credit card interest rates will go even higher in 2018.
H/T: NBC News