Credit card use and consumer spending is increasing, according to the American Bankers Association’s (ABA) latest Credit Card Market Monitor report.
The ABA said the volume of monthly credit card purchases from January through March went up 10.1% for subprime accounts, 8.9% for prime accounts, and 9.9% for super-prime accounts compared to the same time last year.
New credit card accounts (those opened in the preceding 24 months) also increased by 13% to 83.5 million, and 13.0% from a year earlier. This was a new post-recession high of 337 million total open accounts.
The growth was mainly in the prime and subprime risk tiers, which rose 14.2 percent and 26.2 percent year-over-year. New subprime account openings were up to 26 million, but remain well below the pre-recession level of 35 million new accounts in the first quarter of 2008.
Jess Sharp, executive director of ABA’s Card Policy Council said, “Credit card use is increasing in part because labor markets continue to improve. Steady reductions in unemployment and faster wage growth have led to an increase in consumer spending.”
The ABA stated that consumers are keeping credit card debt at manageable levels.
“While more consumers are using credit cards for short-term financing, the amount of credit card debt they are carrying relative to their disposable income is quite low by historical standards,” said Sharp.
“When people re-enter the work force and establish a good payment history, their credit scores improve,” Sharp said. “As wages grow and the economy remains on solid footing, card issuers can be more confident in providing additional credit to those who have demonstrated the ability to meet their obligations.”