Consumer Credit Card Use is on the Rise Among Americans with Low Credit Scores

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CreditCardForum expert industry analyst provides commentary on newly issued report

CreditCardForum, the premier one-stop resource for and by consumers seeking in-depth information, opinions and advice on credit cards, has today issued expert commentary to the market discussing The New York Federal Reserve Bank’s quarterly report, which illustrates that credit card use is on the rise, particularly amongst those who have low credit scores.

According to the report, national household debt totaled at $12.3 trillion in the second quarter of this year, a $35 billion leap from the data outlined in Q1. Driving those escalating numbers? A new found $17 billion in credit card debt, coming from an unsuspected sector of the market.

The Great Recession gave way to a sharp decline in credit card debt, but since the gloomy outlook on credit cards that perforated years 2008-2013, debt has slowly been creeping back up, as both unemployment rates have decreased and the economy has strengthened. Returning to help inflate market numbers further are individuals with subprime credit scores—of less than 620—who had previously been largely locked out of the credit arena.

“Subprime consumers of 2016 are not the same borrowers they were during the financial crisis,” said CreditCardForum President and General Manager Ben Woolsey, who has gained a unique insight into consumer credit card trends and spending through his more than 30 years professional experience in the credit card industry, as well as his analysis of the opinions and comments posted in CreditCardForum’s consumer threads. “Those within any market are invariably victims of circumstance—be it personal economics or those on a national scale—and subprime borrowers are no exclusion.”

The report demonstrates positive trends in current household debt as well as highlights improvements in delinquency rates that have continued to maintain a downward trend, despite the availability of credit becoming more inclusive. Less than one percent of card balances is between 90-180 days delinquent, a low that hasn’t been seen since early 2000. Additionally, severely derogatory balances—including those that have been written off by banks—are at the lowest levels found in historical data.

“In the subprime market today, borrowers are able to reliably service their debts, demonstrating they understand how maintaining a credit card can be useful in improving both their credit scores and life options,” said Woolsey. “Now that the dust has settled, post-Great Recession borrowers—including those who have always been seen as high-risk to creditors—are responsibly leveraging the power of credit to better manage their financial lives.”

Once squeezed out of the market due to lower credit scores, subprime borrowers are beginning to recover their accessibility to credit cards once again, and—though their credit limits may be smaller—the number of newly opened cards is on a steady incline, representing an evolution in the country’s credit cycle.

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About CreditCardForum
CreditCardForum is the premier one-stop resource for and by consumers seeking in-depth information, opinions and advice on credit cards that also allows for immediate comparison and application to preferred cards. Since 2008, the site has been the leading online community dedicated to consumer-driven education on the credit card industry. The user-contributed forum is enhanced by a hosted blog that covers latest industry developments that help consumers make more informed decisions regarding their credit cards. It also serves as a repository for key market data from multiple sources that provides a snapshot of the industry, backed by experts in the financial services and banking arena. CreditCardForum is the go-to site for thousands of credit-card users each week seeking information and constructive peer-to-peer engagement with the aim of strengthening their financial bottom line.

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Amy Palmer
Account Executive
Leverage PR

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Amy Palmer
Leverage PR
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