Monthly purchase volumes for super-prime credit card account holders increased nearly 14 percent in the second quarter, surpassing even pre-pandemic numbers, according to the latest American Bankers Association Credit Card Market Monitor.
Purchase volumes rose 15.5 percent for prime account holders and 16.6 percent in the subprime category. The share of account holders who paid their balance in full each month increased 2.2 percentage points to a record high 36.6 percent. The share of account holders with revolving monthly balances declined 2 percentage points to a record low 38.5 percent. Credit card debt as a share of disposable income increased 45 basis points to 4.42 percent, after hitting a record-low in the first quarter.
“Overall, consumer financial health remained strong in the second quarter as the labor market expanded and consumer retail spending grew robustly,” said ABA Chief Economist Sayee Srinivasan. “The data suggest that consumers remained focused on keeping credit-card balances manageable and spending within their means.”
The total number of accounts opened over the last 24 months fell 19 percent over the last year to the lowest level since 2014 as many Americans received infusions of government stimulus dollars during the pandemic. The total number of accounts slightly increased from the first quarter but remains down 2.6 percent over the last year, fueled by a 17 percent drop in subprime accounts.
According to the Federal Reserve Bank of New York’s most recent Credit Access Survey, credit rejection rates increased by two percentage points, from 15.7 percent last year to 17.5 percent in 2021, fueled by an increase in applications by people with lower credit scores. Rejection rates for credit card and mortgage loan applications also increased, according to the Fed, while auto loan and credit limit increase applications saw slight declines. Application rates rebounded to a pre-pandemic level of 45.6 percent this year. Nearly 30 percent said they would likely apply for credit in the next 12 months, an increase from 26 percent in 2020.