CHICAGO–A new analysis from TransUnion reveals Americans are continuing to leverage their existing credit account lines more than ever, while affordability challenges have caused consumers to open fewer new credit accounts.
These findings are part of the newly released Q3 2023 Quarterly Credit Industry Insights Report (CIIR) from TransUnion.
According to TransUnion, bankcard balances have increased 15% year-over-year (YoY) to set a new record at $995 billion at the end of Q3 2023, up from $866 billion one year prior.
“Of particular note is the balance share of Millennials, which now has surpassed that of Baby Boomers as the second greatest balance share of any generation, only behind Gen X,” TransUnion stated. “The average balance per consumer also increased by double-digits YoY, up 11%, to $6,088. This represents the highest average balance per consumer in the last 10 years.”
The Squeeze
Charlie Wise, senior vice president of global research and consulting at TransUnion, said that as consumers have become squeezed by rising costs and rates, they have turned to existing available credit lines.
“It will be worth watching how those balances are further impacted as some consumers begin feeling the pinch of the resumption of student loan payments,” Wise said.
Additional Findings
Meanwhile, TransUnion is reporting its analysis found that conversely, while balances across many credit products are higher YoY, originations for those same credit products lagged behind the levels that they were at one year ago.
“Mortgage originations lead the decline, down nearly 37% YoY, as potential home buyers continued to hold-off in the face of high interest rates and home prices, which show no sign of dropping in the near future, and the refinance market remains on the sidelines for now,” TransUnion said. “Unsecured personal loan originations were also down significantly YoY from the record levels in 2022, down nearly 15%, as lenders have increasingly focused on less risky credit tiers when considering new unsecured personal loan originations.”
Less Risky
The report also found lenders have continued to look to less risky credit tiers when considering new originations, in response to rising delinquencies for unsecured products that began in mid-2021.
“For instance, among bankcard originations in Q2 2023, the super prime share was 22.5%, up from 18.6% in Q2 2022,” TransUnion said. “This stands in contrast to the subprime segment share, which fell from 24.1% in Q2 2022 to 20.7% in Q2 2023. A similar story can be seen when looking at unsecured personal loans, where subprime’s share of originations in Q2 2023 fell to 36%, down from 39.5% one year prior, while super prime (7.9%, up from 5.6%) and prime plus (11.6%, up from 10.4%) both grew over the same period.”
For more info: Q3 2023 Quarterly Credit Industry Insights Report webinar.
As Winter Approaches, the Price for the Best Daily News Update in Credit Remains a Nice, Cozy Free!
The biggest, best and freshest news reporting in credit unions remains free! Each morning CUToday.info delivers its daily Fresh Today news update offering the latest headlines and breaking news right to your email, with the easy-to-read headlines format allowing you to click on the stories that interest you most in order to learn more. So stop paying those bank-fee-like subscription prices from other so-called “news” publications!
If you haven’t yet signed up for the new email solution on which CUToday.info has partnered with ResponseGenius, you can do so here. Signing up requires less than one minute of your time—and it’s free!
Please note that after signing up you may need to go to your Spam/Junk folder and mark the morning headlines email as safe. CUToday.info does not provide its list of readers and emails to outside parties, and we will not be contacting you to sell you an extended warranty or sending you any links so you may cash in on an inheritance you didn’t know was coming.
And did we mention it’s free?