With fewer credit cards in their wallets after the recession, U.S. consumers are tapping more of the total credit lines available on the cards they do have while racking up less overall debt than they were a year ago, according to data Experian released March 2.
Each U.S. consumer at the end of 2010 held an average of 1.97 bankcards, down 23% from 2.56 cards at the end of 2007, according to Costa Mesa, Calif.-based Experian Consumer Information Solutions, a unit of Dublin, Ireland-based credit bureau Experian PLC. Consumers had an average of 2.03 bankcards at the end of 2009 and 2.46 at the end of 2008.
Cardholders also are using a larger share of their available credit lines on their cards, the firm says. As of Dec. 31, consumers on average tapped 30.68% of their total available bankcard credit lines, up 262 basis points from 28.06% three years earlier, the firm says.
The percentage of total credit lines cardholders tapped tends to have a negative effect on credit scores, Experian says. For example, “utilization,” or the amount of total available credit a consumer uses with a bankcard, accounts for approximately 23% of a consumer’s VantageScore, the firm says. Stamford, Conn.-based VantageScore Solutions LLC is a joint offering by credit bureaus Experian, Equifax Inc. and TransUnion LLC; it was launched in 2006 to compete with Fair Isaac Co.’s FICO score.
On the plus side for overall credit scores, U.S. consumers at the end of last year on average racked up less bankcard debt than a year earlier. The average consumer owed $4,283.65 in bankcard debt as of Dec. 31, down 4.1% from $4,466.57 at the end of 2009, Experian data show.
Consumers in San Antonio had the highest average bankcard debt at the end of last year at $5,177, followed by Jacksonville, Fla., with $5,115, Atlanta with $4,960, Honolulu with $4,939, and Dallas with $4,936.
Credit card issuers closed many consumers’ accounts and slashed credit lines over the past three years as they moved to cut losses and minimize risk during the financial crisis, which contributed to lower overall credit card spending, according to ratings agency Moody’s Investors Service (
What do you think about this? Send us your feedback.
