CHICAGO—U.S. lenders issued more credit cards than ever last year, with a growing share of the plastic going to consumers with lower credit scores, a new report reveals.
A record 196 million Americans held cards at the end of 2021, according to a report by TransUnion. In the third quarter, the latest quarter for which detailed numbers are available, the number of new cards issued hit an all-time high of 20.1 million, the company said. Some nine million of those cards went to non-prime borrowers.
“The surge shows how lenders seeking growth are eager to tap into consumers who’ve largely been able to meet their obligations even after pandemic stimulus programs ended last year,” Advisor Perspectives stated in its analysis. “Credit-card issuers have been ramping up marketing campaigns and competing to lure customers. Interest rates charged on cards were at longtime highs last year relative to risk-free rates on Treasury debt.”
Capitol One Financial Corp., primarily a card lender, spent almost $1 billion on marketing in the October-December period, double the sum it spent in the first quarter, according to the report.
‘Very Good Place’
“I am struck by how the consumer is in a very good place right now,” Capitol One Chief Executive Officer Richard Fairbank said on a recent earnings call, noted Advisor Perspectives. “We’ve got a strong consumer,” he said, with “everybody sort of roaring out of the pandemic.”
Consumers are still relatively cautious with their new cards. The average balance per borrower was little changed from a year earlier in the fourth quarter, at $5,127, and remained well below pre-pandemic levels, TransUnion said.
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