Americans are using their credit cards more than ever — and some experts think that’s a good thing.
The number of credit card accounts increased by 2.6% compared to this time last year, according to TransUnion’s Q1 2018 Industry Insights Report. Currently, there are 416.5 million credit cards and 174.9 million consumers with access to a credit card.
Also on the rise is the average credit card debt per borrower, which increased by 2.63% since last year, jumping from $5,332 to $5,472. The serious credit card delinquency rates per borrower was 1.78% as of the first quarter in 2018, an increase from 1.69% a year ago.
This is the first time America has seen a delinquency rate this high in quarter one since the 1.77% delinquency rate in 2012, although it remains below the 10-year first quarter average of 1.91%.
The most balance growth on a percentage basis came from Generation Z and millennials, but Generation X borrowers had the highest balances of any generation with an average loan balance of $7,029. That’s a whopping difference compared to Gen Z’s average loan balance of $1,181, the lowest of all generations.
With more people borrowing and more people failing to pay back those funds in a timely fashion, does this concoction create a lethal cocktail for the American economy?
Paul Siegfried, senior vice president and credit card business leader at TransUnion, doesn’t think so.
“We believe it’s a positive sign for the economy that more consumers have access to credit and that delinquency rates, while growing, are doing so at a slow pace and remain below levels observed immediately post-recession,” Siegfried said in a press release.
Andrew Haughwout, senior vice president at the New York Federal Reserve, explained to Reuters that delinquency rates surged during the financial crisis and lenders tightened their standards post-crisis.