Market Research: EMAIL OR CALL 800-356-8010, ext. 4172
Economics & Statistics: EMAIL OR CALL 800-356-8010, ext. 4399
CUNA Strategic Services: REQUEST INFO
Strong Growth in Subprime Credit
Posted November 12,2014 by CUNA Economics

Consumers not willing to overextend.  

“New credit growth for bank- and retail-issued cards is strongest among subprime borrowers,” according to a recent Equifax press release

Subprime borrowers are defined as those with a risk score of 660 or lower.   

“As the economy improves, consumers appear to be ready to expand, or in some cases, rebuild their credit,” says Senior Vice President and Chief Economist at Equifax, Amy Crews Cutts.   

“New credit card accounts for those consumers with a subprime credit score have shown more than a 40% increase to date this year over the same time last year.  This reflects consumers’ appetite for new credit, and lenders’ willingness to offer it.”  

Despite taking advantage of available credit opportunities, consumers seem reluctant to overextend, “they are hesitant to take on new debt,” as although new accounts grow, balances in both the prime and subprime markets have grown very little, says Equifax.  

Key takeaways from the report regarding bank issued cards:  

  • Loans outstanding are at the highest in five years, at more than 325 million;
  • 28.8 million new cards have been issued year-to-date in July.  This is up 21.3%.
  • Balance of available credit exceeds $2.56 trillion; a five-year high.
  • Write offs as a “percentage of total balances outstanding in September 2014” dropped 15.9% from the previous year, at 3.48%.
  • New credit limits year-to-date July 2014 is 28.8 million, which is up 21.3% over the previous year and a six-year high.  

Retail-issued cards reveal growth trends also:  

  • Loans outstanding for September 2014 exceeds 195 million—the highest since January 2009.
  • Total outstanding balance is up 6.7% to $59.6 billion from the previous year.
  • Newly issued cards year-to-date July 2014 is 21.7 million, up 2.7% from the previous year--and a seven-year high.
  • Write offs as a percentage of all outstanding balances is 7.04%, down 3.5% from the previous year.  

Meanwhile, all credit card loans outstanding at credit unions are up 0.1% in September 2014, according to CUNA’s Monthly Credit Union Estimates for September 2014.  

And, nationally, growth rates of credit card balances at credit unions stand at 8.4% as of June 2014 (annualized), a steady increase since 2010 when growth rates were at 3.1%, 2011 with growth rates of 3.9%, 2012 at 5.7%, and 2013’s 7.7%, according to CUNA’s U.S. Credit Union Profile, Mid-Year 2014.



Subprime Auto Bubble?   

Leave a comment

Right Promo- Membership

This blog site is owned and controlled by Credit Union National Association (CUNA). The site does not offer legal, accounting of other expert or professional services or advice. CUNA has the sole right and ability to delete or refuse to post any item, for any reason and at any time. Opinions expressed by third parties are not the opinions of CUNA and appearance of a posting on the site does not imply endorsement, recommendation or agreement by CUNA with the content of the posting. CUNA’s occasional monitoring of the site does not provide users with any guarantee regarding any third party posting or make CUNA responsible for them in any way.

CUNA shall not be liable for damages of any kind regarding use of this site, errors on the site, viruses on the site, failure of the site to operate, third party links, and any purchase of a service or a product not sold directly by CUNA.

CUNA shall not be liable in any way for postings of third parties that are libelous, defamatory, obscene, raise antitrust concerns or infringe on a copyright or trademark. Materials such as those are strictly prohibited. Users indemnify CUNA for any claims resulting from their posting.

CUNA may permit disclosure of information relating to users of this site to law enforcement authorities or as a result of subpoena.