April 2, 2012 1:18 am
For example, the number of bank credit card accounts increased from Dec. 2010 to Dec. 2011, a product of lenders more aggressively seeking new customers and consumers’ increasing demand for new credit. New credit in 2011 ($782 billion) remained below pre-recession levels, but gained more than 10 percent over 2009 and 2010 levels ($695 and $709 billion, respectively).
Increases in credit limits were also seen in 2011, as total retail credit card limits increased 6 percent year-over-year from Dec. 2010 to Dec. 2011 and total bank credit card limits jumped 24 percent from Dec. 2010 to Dec. 2011.
Other notable findings from the Equifax report include:
Bank Credit Cards
- Lending to sub-prime consumers showed a 41 percent increase from 2010 to 2011 as sub-prime borrowing hit a four-year high in Dec. 2011 with 1.1 million new bank credit cards issued.
- New sub-prime card limits grew 55 percent from 2010 to 2011. At $12.5 billion in 2011, bankcard limits are at their highest level since 2008 ($27.4 billion).
- Bank credit card growth continues, but is still well below pre-recession levels. In 2011, 39.9 million bankcards were opened, an 18 percent increase from 2010 and the highest total since 2008.
- The increase in total bank credit card originations was accompanied by a 31 percent increase in total credit limits from 2010 to 2011. 2011 marked the first time in over four years that credit lines increased, reaching $163 billion.
- In early 2009, the share of retail card balances held by low-risk borrowers started increasing markedly. Today, low-risk borrowers hold just below 42 percent of retail card balances, followed by high-risk borrowers who now make up nearly 26 percent of balances outstanding.
- From 2010 to 2011 there was a 4.7 percentage point increase in retail card originations to sub-prime borrowers, making up 31 percent of 2011 retail credit card originations.
- Retail credit card limits grew almost 6 percent in 2011, totaling $60 billion for newly originated cards.
- The decline in total retail card limits appears to be nearing a bottom as delinquency rates and write-offs show continued declines.
- New consumer finance loans originated in 2011 (20.2 million) were up over 4 percent from 2010 (19.4 million), and the highest since 2008 (24.8 million).
- Consumer finance delinquency rates are on the decline, dropping to 7 percent in February 2012, the lowest level since July 2007.
- From 2007 to 2010, consumer finance loan originations were falling, but the trend reversed in 2011, with $1.2 billion of new loan amounts added.
- New consumer finance originations for the month of December reached $5 billion in 2011; the last time December originations were that high was in 2008 ($5.1 billion).
- Consumer finance loans have typically served high-risk consumers, but in February 2011, low-risk borrowers became dominant in the segment; as of February 2012, just over 33 percent of consumer finance loans (by dollars) were to high-risk borrowers while 39 percent were to low-risk borrowers.
Published with permission from RISMedia.