Consumers regained an appetite for credit cards after a big lull following the 2008 financial crisis, with new accounts up 14 percent for 2011 compared to the year earlier.
The credit bureau TransUnion also reports that the average credit card debt per borrower increased $239 to $5,204, though it remains near record-low levels.
While credit card debt is growing again, consumers are remaining disciplined.
The national credit card delinquency rate – 90 days or more past due – was at .78 percent in the fourth quarter of 2011, a drop of almost 5 percent from the same period one year ago and the lowest level since 1995, according to TransUnion.
“2011 closed out with the lowest year-end card delinquency rate nationwide since 1995,” said Ezra Becker, vice president of research and consulting in TransUnion’s financial services business unit. “This is the net result of riskier loans having worked their way through the system, cautious risk management strategies on the part of lenders and consumers working to maintain the health and good status of their card relationships.”
In 2010, only 21.8 percent of new card accounts went to consumers with a VantageScore lower than 700 (on a scale of 501 – 990). In 2011, that number had risen to 25.2 percent.
“We have seen a shift toward non-prime borrowers beginning in the second half of 2010 and continuing through the fourth quarter of 2011, which makes the current low delinquency rates even more remarkable,” Becker said..
The shift has been driven partly by intense competition among lenders for prime borrowers, and the effects of consumers in the prime borrowing category reducing their credit card debt.
As a result, many lenders have focused more on the non-prime card market.