TransUnion: Credit card usage, delinquency rates rise in Q1 2018

CREDIT CARD USE and serious delinquencies both rose in the first quarter of 2018 compared with Q1 2017, according to TransUnion's Q1 2018 Industry Insights Report. / BLOOMBERG FILE PHOTO/DAVID PAUL MORRIS
CREDIT CARD USE and serious delinquencies both rose in the first quarter of 2018 compared with Q1 2017, according to TransUnion's Q1 2018 Industry Insights Report. / BLOOMBERG FILE PHOTO/DAVID PAUL MORRIS

PROVIDENCE – Credit card use and serious delinquencies both rose in the first quarter of 2018 compared with Q1 2017, but experts said delinquencies are not very worrisome because issuers are steering away from high-risk customers.

The statistics were reported in TransUnion’s Q1 2018 Industry Insights Report.

Paul Siegfried, senior vice president at TransUnion, said the delinquency numbers are not alarming, for a few reasons.

“Credit card issuers have been relatively conservative over the last five quarters, issuing more credit to lower-risk consumers compared to higher-risk consumers,” he said.

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Further, he said, “The credit limits they are extending to consumers … are generally lower than those they had issued in prior years.”

Siegfried said delinquency rates are growing slowly, and broader access to credit is an overall positive sign of the state of the economy.

The report said there are more than 416 million credit cards in use by nearly 175 million consumers.

The number of credit card accounts rose 2.6 percent in the last year to 416.5 million in Q1 2018. During that time, the number of consumers with access to a credit card increased by 2.1 percent to 174.9 million.

Serious delinquency rates per borrower increased in Q1 2018 to 1.78 percent, up from 1.69 percent in Q1 2017. The current delinquency rate is now the same as in Q1 2012 but below the 10-year average of 1.91 percent.

The average card debt per borrower also rose by 2.63 percent to $5,472 in Q1 2018.

TransUnion reported the most growth in balances on a percentage basis from people in Generation Z (born between 1995 and 2012) and millennials (born 1983 to 2000). However, Generation X borrowers (born mid-1960s to early 1980) had by far the highest balances of any generation.

“Credit cards are a vital part of the consumer credit economy, and their continued good performance bodes well for other credit products such as auto loans and mortgages,” said Matt Komos, vice president of research and consulting at TransUnion.

Growth in Q1 2018 was driven by more new accounts for super prime (+4.9 percent) and prime plus (+3.2 percent) borrowers, as lenders slowing originations for the higher-risk subprime and near-prime customers. Lenders manage their credit exposure by generally decreasing average new-account credit lines.

Mary Lhowe is a PBN contributing writer.

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