Consumers lean on unsecured debt as cost of living bites, reports TransUnion

investmentnews.com:

Higher interest rates and inflation have pushed household budgets to beyond their limits, forcing many American consumers to take on more debt.

New stats from TransUnion show that bank card balances were up 15% in the third quarter of 2023 compared to a year earlier, with a new record high of $995 billion, with millennials overtaking boomers as the second biggest bank card credit users behind Gen Xers.

The average bank card balance per consumer reached its highest level in ten years at $6,088, an 11% increase year-over-year, while total bank card credit lines increased 9% to $4.6 trillion while the average credit line per consumer has surpassed the $25,000 mark.

Average bank card utilization was 24.1%, below the pre-pandemic level of 24.6% seen in Q3 2019. However there was a slight increase in past-due levels of 90 or more days to 1.91%, up 30 basis points from Q3 2019.

New bank card originations were down almost 4% year-over-year to 20.5 million.  

“Q2 2023 showed another historically strong quarter for bankcard originations, though lower than last year’s record level, as lender acquisition strategies shifted away from below prime originations for the third consecutive quarter,” said Paul Siegfried, senior vice president and credit card business leader at TransUnion. “In contrast, the bankcard origination share for prime plus and super prime are up from one year ago, indicating a shift by lenders to focus on acquiring lower risk new accounts.

TransUnion’s Credit Industry Insights Report also shows a 14.8% increase in unsecured personal loan balances year-over-year, ending Q3 2023 at $241 billion, the eighth consecutive quarterly record.

The average balance per consumer for these credit products grew nearly 9%