The number of new credit card accounts jumped 11% to 84.9 million in the second quarter while monthly purchase volumes also increased, according to a report by the American Bankers Association.
The Credit Card Market Indicator Report, released Tuesday, said monthly purchase volume was up 5.1% for subprime accounts, while prime and super prime account volume rose by 6.9% and 8.3% respectively.
"Consumer spending was strong in the second quarter, driven in part by an improving labor market and steadily rising wages," said Jess Sharp, executive director of the ABA's Card Policy Council, in a press release. "As consumers continue to gravitate toward credit cards, it's no surprise that purchase volumes and account openings are on the rise."
Both the number of new accounts and overall level of accounts are increasing, a sign that the economy is having a healthy recovery after the consumer interest in using credit cards hampered by the financial crisis, ABA Chief Economist James Chessen said in an interview.
"As we near full employment, we expect to see wages continue to rise that improve the capacity of individuals to meet their obligations," said Chessen. "And that is a very good sign for the support for our economy, which is largely driven by consumer spending."
At the same time, however, credit card debt outstanding relative to disposable income is near historical levels of 5.23%, and has remained flat since mid-2012.
"That to me is the interesting contrast," said Chessen. "You have purchase volume increasing, you have the credit card number increasing, yet the credit card debt outstanding relative to disposable income is flat as a pancake. Consumers are doing a very good job managing their debt level in a way that makes it affordable."
The number of subprime credit cards accounts increased the fastest when compared with prime and super prime accounts from 2015 to 2016, but Chessen noted that subprime accounts were just 20% of credit card accounts, down from 28% in 2009.
"It stays at the same level over the last four years, so it's not so much what's the quarterly increase of those accounts, it's what is the share of the total subprime accounts to the total, and that stays very low and below the pre-recession level," said Chessen.
It's "showing great responsibilities on the part of credit card issuers and their consumers in managing the amount of debt that is outstanding. Credit card companies are being cautious how they extend credit and how quickly they extend it, and perhaps more importantly, consumers are very sensitive about keeping their debt to a manageable level," said Chessen. "And that is the best news. We see an economy expanding, the access to credit readily available, we see consumers managing that credit responsibly."