The new 2023 report from TransUnion brings to light the current trends among U.S. consumer balances among credit cards, personal loans, and bank cards. Here’s what you need to know about the new reporting.
Record High Credit Card and Personal Loan Balances
Credit card and personal loan balances have now reached record highs or near-record highs. The recent release of the Q1 2023 Quarterly Credit Industry Insights Report (CIIR) from TransUnion has provided deep insight into the state of the consumer’s current relationship with credit cards, personal loans, and more. To no surprise, inflation and high-interest rates have driven consumers to skyrocket their balances to make ends meet by turning to credit to support household budgets.
Credit Card Trends
Credit card balances remain at a record high of $917 billion. While balances have been slightly down by 1.5%, quarter-after-quarter, the overall year-over-year (YoY) has increased by almost 20%. Credit card balances typically trend down during the first quarter due to tax season. During this season consumers receive their tax refund and use it to pay down existing credit card debt but overall remains high in comparison to the prior year.
Unsecured Personal Loan Trends
Similarly, unsecured personal loan balances have also reached a high point in Q1. The balances for unsecured personal loans have reached a high of $225 billion. To break it down further, that is an increase of 26.3% year-over-year. However, the results of Q1 are the second consecutive quarter that shows a slowdown in year-over-year growth rates.
This could mean lenders are showing strict analysis while making underwriting decisions. The average unsecured personal loan balances since 2005 are $11,281. Credit-wise, subprime consumers resulted in the highest increase in balances by 40%. Followed by super prime at 34%. And coming in at the lowest balances is the super prime consumers with increases just under 20%.
Furthermore, bankcard balances were also analyzed at a record high of $917 billion, a 19.2% YoY growth. Similar to credit card balance trends, bankcards also experience a seasonal dip and Q1 is the second consecutive quarter to show a slight balance decrease by 1.5% (quarter-over-quarter).
The report also found subprime share consumers with a balance declined by 10.2% from 10.9% the previous quarter. The balance for super prime consumers increased to 41.8%, up from 40.6% in the former quarter. The share of balances for Millennials has increased up to 28.6% in Q1 2023, from 26.5% in 2022.
Credit Lines on the Rise
Balances are not the only numbers on the rise, so are credit lines. In Q1 2023, credit lines reached $4.4 trillion with a 9.7% increase. The growth was observed among all consumers, but 60% of the increase was driven by super-prime borrowers.
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