The credit card market continued to grow in last year’s fourth quarter as new account growth accelerated and average credit lines increased for prime and super-prime borrowers, according to the American Bankers Association’s latest Credit Card Market Monitor report.
The uptake in job growth was credited as the probable cause for the increase in credit lines by the report.
“The credit card market continued to gain steam even as economic growth slowed at the end of last year,” Molly Wilkinson, executive director of ABA’s Card Policy Council, said in a statement. “Looking ahead, steady employment gains and wage growth make it likely that credit card markets will continue to expand throughout 2015.”
Monthly purchase volumes of prime and super-prime accounts continued to increase, while sub-prime accounts slightly declined. However, the June 2015 monitor said the 14 percent increase in the number of new credit card accounts was driven by gains in prime and sub-prime accounts.
Even with slowed economic growth at 2.2 percent the credit card market continued to expand, as a larger percentage of accountholders actively used their credit cards. The active credit card use suggests consumer confidence in the U.S. economy, according to Wilkinson. Credit card debt has not increase with the more active use, as consumers paying their monthly balance in full were more active and those who only pay part remained more dormant.
Credit lines increased 1.7 and 2.7 percent in the fourth quarter of 2014 for prime and super-prime cardholders.
“Recent credit line increases for prime and super-prime cardholders show that lenders have become more confident in these borrowers’ ability to meet their financial obligations in an improving economy,” Wilkinson said.
The credit lines for high-risk borrowers continued to decline by 0.4 percent for new sub-prime accounts and 0.7 percent for all sub-prime accounts, though an increasing share of new accounts is made up by these consumers.