In another sign that U.S. consumer credit card issuers are beginning to see some new-account growth following the recession, Equifax Inc. on May 20 reported new bankcard accounts in February were up 28% compared with a year earlier.
Certain analysts say the uptick is a positive sign, but most observers say it is too soon to look for a major reversal in the broad trend of consumers shedding credit card debt, reflected in the latest Federal Reserve Board data.
Along with the increase in general-market consumer credit card accounts, account growth among subprime borrowers rose by 75% in February compared with a year ago, Equifax said. Equifax classifies subprime borrowers as those whose average credit scores are less than 660 on scale of 280 (riskiest, or subprime) to 850 (least risky, or prime).
The Atlanta-based credit bureau based its account-growth measurement on the total number of new credit lines lenders approved during the month; the total number of new accounts approved is not available.
Lenders during February also approved 66% more in total new credit for subprime borrowers compared with a year earlier, Equifax said.
The average individual credit limit for new accounts during February was $4,008, down 1.9% from $4,086 a year earlier, while the average credit limit for subprime borrowers was $977, down 4.7% from $1,025, Equifax said.
The increase in account approvals aligns with Fed survey data released in February suggesting that some large banks began easing credit card underwriting requirements during last year’s fourth quarter.
Equifax’s new data suggest “a positive direction” for credit card issuers, says Scott Strumello, an associate at Auriemma Consulting Group.
“There are a variety of macroeconomic indicators showing that things are picking up for credit card lenders,” he says. “But it’s not enough to reverse the deep plunge in consumer borrowing we’ve seen over the last couple of years. ... It will be a long time before we see robust growth.”
