U.S. Consumers Using Credit Cards More as 'Transaction Tools'

U.S. Consumers Using Credit Cards More as 'Transaction Tools'Americans are using their credit cards more as a payment tool than a source of prolonged debt.
That’s part of a trend since the financial crisis and Great Recession of reducing overall credit card debt.
From the third quarter of 2012 to the third quarter of 2013, total credit lines increased by 4.6 percent, according to the Credit Card Market Monitor report from the American Bankers Association for the first quarter 2014
However, the increase was entirely due to rising credit availability for super-prime accounts. Credit lines for prime and sub-prime accounts continued to decline.
Prime and sub-prime accounts represent their smallest share of total credit lines in the past six years – down from 42 percent in 2008 to 32 percent in 2013.
“Monthly purchase volumes are generally rising, but average ending balances are declining,” the ABA’s report says. “This pattern is consistent with a historically high share of accounts falling into the ‘Transactor’ category.”
That means that consumers are using credit cards more as a transactional tool to pay for goods and services, rather than as a form of debt.
The health of credit card portfolios continues to improve. The average credit score for sub-prime accounts is rising faster than other risk categories.
Moreover, credit card delinquency rates fell to 2.39 percent, the lowest point since the Federal Reserve began publishing data in the first quarter of 1991.

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