CFPB: Credit card balances continue to grow above pre-recession levels

cfpb-logoThe CFPB released its fourth biennial report on the state of the credit card market for the 2017-2018 period.

In 2009, the Credit Card Accountability Responsibility and Disclosure Act was established. The CARD Act requires the CFPB to prepare a biennial report to Congress regarding the consumer credit market.

Key findings from the report include:

  • Total outstanding credit card balances have continued to grow and at year-end 2018 were nominally above pre-recession levels. Throughout the post-recession period, including the period since the bureau’s 2017 Report, purchase volume has grown faster than outstanding balances. Late payment rates have increased for new originations of general purpose and private label cards, both overall and within different credit tiers.
  • The total cost of credit on revolving accounts has increased over the last two years and in 2018 stood at 18.7 percent, which is the highest overall level observed in the bureau’s biennial reports. Recent total cost of credit increases are largely the result of increases in the indices underlying variable rates, such as the prime rate.
  • Most measures of credit card availability — overall and across credit score tiers — have remained stable or decreased slightly since the 2017 report. Measured by application volume, consumer demand for credit cards peaked in 2016. Approval rates have also declined slightly since 2016. Driven by lower approval rates, annual growth in the number of credit card accounts opened and the amount of credit on new accounts has also leveled off.
  • Cardholders have increased their use of reward cards, driving up the cost to the industry to fund these products. The levels and consumer costs of balance transfer and cash advance use remained largely unchanged.
  • Since the 2017 report, issuers have lowered the range of their daily limits on debt collection phone calls for delinquent credit card accounts.
  • New technologies have further enhanced consumers’ interactions with and control over their credit cards. New technologies, artificial intelligence and machine learning are changing how providers are able to manage risk and provide customer service.

To download a PDF version of the complete report, click here.

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