Subprime Loans Rebound
ATLANTA-Sub-prime origination growth across all lending sectors continues with notable increases, according to U.S. consumer data in Equifax's March "National Consumer Credit Trends Report," a joint product of Equifax and Moody's Analytics.
The report shows origination growth across multiple vertical markets through 2011. The number of bank credit card accounts increased from December 2010 to December 2011, which the companies said was 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% over 2009 and 2010 levels ($695 and $709 billion, respectively).
Increases in credit limits also were seen in 2011, as total retail credit card limits increased 6% year over year from December 2010 to December 2011 and total bank credit card limits jumped 24% from December 2010 to December 2011. Consumer finance credit limits also saw a comparatively modest improvement of $1.2 billion from Dec. 2010 to Dec. 2011.
Total consumer debt in the U.S. currently stands at $11 trillion, a decrease of 11% from its peak in Q4 2008 at $12.4 trillion. The drop is driven by a nearly 12% drop in home financing balances. After reaching a post-recession low of $1.60 trillion in May 2011, consumer debt balances have risen about 2%.
Other notable findings include:
* Lending to sub-prime consumers showed a 41% 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% 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% increase from 2010 and the highest total since 2008.
* The increase in total bank credit card originations was accompanied by a 31% increase in total credit limits from 2010 to 2011. 2011 marked the first time in more than four years credit lines increased, reaching $163 billion.
For info: www.equifax.com
Anxiety Index Improves
SAN FRANCISCO, Calif.-The Money Anxiety Index's preliminary level of 89.3 in April improved 1.3 points over March, and is the first time the level of consumer financial anxiety dipped below 90 since June of 2009.
April's improvement in the Money Anxiety Index is the 10th consecutive month of decreasing financial anxiety, which started in June of 2011 when the index peaked at 99.5. Dan Geller, Chief Research Officer at Money Anxiety Index, said the MAI was the only consumer index that detected the trend in improved consumer confidence starting in mid-2011.
For info: www.moneyanxiety.com
'Disturbing Lack of Skills'
WASHINGTON-Consumers displayed a "disturbing lack of basic financial skills that are critical to building a stable financial future" according to a recent survey by the National Foundation for Credit Counseling (NFCC) and the Network Branded Prepaid Card Association (NBPCA).
The 2012 survey found:
* 56% of U.S. adults admit that they do not have a budget
* One-third of U.S. adults, or more than 77 million Americans, do not pay all of their bills on time
* 39% of adults carry credit card debt from month-to-month
* 40% of adults indicated they are now saving less than they were one year ago; 39% do not have any non-retirement savings
* 25% of those who do not currently have non-retirement savings indicated that, if they did begin to save, they would keep their savings at home in cash
For the first time, the 2012 survey evaluated consumer responses related specifically to prepaid debit cards and found:
* 13% of adults, typically use prepaid debit cards to pay for everyday transactions
* 78% of adults who use prepaid debit cards for everyday transactions say they use them because they are convenient
* 73% percent use prepaid cards because they feel the cards are safer than cash
* 72% utilize prepaid cards because it allows them not to overspend or spend money they don't have
For info: www.nfcc.org or www.nbpca.org
