Fourth quarter sees explosion in new cards
Consumers have generally been feeling hesitant about dealing with credit card debt in the last several months thanks to improvements in the economy, and it appears they are now once again opening new accounts at a considerable rate.
A number of statistics have shown that consumer credit card use is up, but new evidence has emerged that Americans are not only using their old cards more often, they’re also opening new ones far more than they have in the past, according to a report from Dow Jones Newswires. In the last few days, the nation’s top credit card lenders have been releasing their fourth quarter regulatory filings, and one in particular showed signs of a massive shift in consumers’ feelings toward borrowing.
Bank of America’s filing noted that the number of new credit card accounts opened between October and the end of December rose 53 percent when compared to the same period in 2010, the report said. That institution is the largest credit card lender in the country. Meanwhile, many other lenders reported similar increases in the amount of borrowing done on the credit cards they had already issued.
The reasons for this shift are myriad, the report said. The improving economy has generally made consumers feel better about borrowing and how that relates to their own financial situation, and the holiday shopping season likely prompted many to open new accounts as a means of financing their gift purchases. In addition, improving conditions related to consumer credit, such as increased spending seen in the last several months and default rates that are still hovering near all-time record lows, have prompted card issuers to continue broadening lending standards and sending out offers for more cards to borrowers with subpar credit ratings.
Data from Mintel Comperemedia shows that the number of credit card offers mailed out in the month of November alone topped 447 million, up from just 346 million in the same month the year prior, the report said. Other studies have found that credit card balances nationwide should grow by 6 percent in the coming year.
This change in consumer sentiment is a sharp switch from attitudes during and immediately following the recession, which saw them scale back their day-to-day credit card use considerably. Millions also dealt with repeated late payments that led to charged off accounts.