Credit card purchase volumes continue growth

Monthly credit card purchase volumes increased across risk tiers late last year, according to the American Bankers Association’s 4Q 2021 Credit Card Market Monitor

Monthly purchase volumes, which increased 4-6 percent, have now risen in three consecutive quarters, according to the ABA. Purchase volumes were 23-27 percent higher than year-earlier amounts. “Although high inflation was partly responsible for the spending increase, inflation-adjusted monthly purchase volumes also rose across risk tiers on a quarterly and annual basis,” the ABA stated.

However, overall new account openings remain nearly 20 percent under pre-pandemic levels, according to the ABA. The share of prime accounts dropped to a near-record low of 26.2 percent. The share of subprime accounts slightly increased. 

Credit card issuers continued to ease standards in Q4 2021, especially for prime and super-prime accounts: Lines of credit for new subprime accounts increased for the first time since 2019. “Subprime accounts continue to take up a significantly lower share of account volumes than they did before the pandemic, while the number of super-prime accounts is near an all-time high,” the report stated. 

Credit card debt as a share of disposable income increased by 20 basis points late last year as income dropped and debt increased. Credit card debt as a share of income is still nearly 90 basis points below Q4 2019.   

“The strong labor market allowed consumers to continue driving the economy forward,” said ABA Chief Economist Sayee Srinivasan. “While the U.S. economy is dealing with higher inflation and consequently rising interest rates, as evidenced by credit card debt as a share of disposable income, U.S. households’ balance sheets remain robust to help absorb shocks from these headwinds.”