TransUnion just released some fascinating numbers in its Q1 2017 Industry Insights Report – and we see the future of the card industry in them.
If you’re thinking about applying for a card in the near future, the TransUnion data holds two trends you’ll want to know about:
1. Growth of the “Prime” club means better card options
Consumers with VantageScores of prime or better has increased from 51 percent in 2010 to 58 percent in 2017.
An increase of 7 percentage points (51 percent to 58 percent) may not sound exciting, but, as TransUnion’s report points out, that represents millions of customers – consumers issuers will want to compete over. We’re already seeing the results of this, in the rapid expansion of (and competition in) cards created for this upper crust. Last year, Chase launched its game-changing Sapphire Reserve card. American Express (a CreditCardForum advertising partner) struck back with an overhaul of its Platinum Card. And U.S. Bank was hot on its heels with its new Altitude Reserve card for luxury travelers.
We expect to see more competition over this growing contingent of prime customers as issuers attempt to appeal to a group that can afford to have high standards.
But card products aren’t the only way issuers will compete. Prime customers want spending power, and issuers are answering that with bigger credit limits (while tightening the belt for sub-prime consumers):
2. Demand for credit is growing, issuers will answer
Average debt per borrower is increasing, with a particularly big jump between 2016 and 2017:
Given this thirst for credit (accompanied by growth in the prime-credit sector), it’s not surprising that issuers aren’t running the tight credit ship they were running immediately following the recession. Access to credit cards now officially exceeds pre-recession levels. At the pre-recession high point, 170.63 million customers had access to a credit card. Now, 171.38 million do:
We expect issuers to continue to try to get into more consumers’ wallets, which could mean more card approvals for all. According to the TransUnion report, issuers are indeed increasingly courting less-than-prime customers. Digging into the card-access numbers above, not all those newly accessible cards are going to those with high credit scores. Roughly 16 million of those consumers are sub-prime, a growth of more than 2 million sub-prime customers since 2015. As a result of those with poor credit getting more card access, delinquencies are up; the percentage of cardholders 90+ days late on their cards has risen to 1.69 percent (from 1.34 percent two years ago).
Handing out more cards to the poor-credit set doesn’t mean issuers are being careless, however. Remember that chart above showing the increase in average limit for super-prime borrowers? It also shows issuers are tightening credit limits for sub-prime borrowers, which helps banks put more cards in more wallets while also limiting their risk.
The bottom line
If you have excellent credit, expect more options and higher credit limits. If you have poor credit, expect an increased chance of approval — but perhaps a frustratingly low limit.
Either way, we have you covered when it comes to finding the best card you can for excellent credit — and on making the most of a low-limit card if you have bad credit.