Card loans, new accounts hit five-year highs: Equifax
November 25 2013
By : Sarah Todd
As credit cards defaults and delinquencies continue to wane, banks and retailers are growing increasingly more confident in extending credit to consumers.
According to the Equifax National Consumer Credit Trends Report released Monday, banks made 27.6 million new credit-card loans between January and August 2013. That's a 7.3% increase from the same eight-month period a year ago and the most new loans issued during that time frame since 2008.
The total amount of new bank-issued credit also hit a five-year high between January and August, rising to $128.7 billion.
The number of cards issued by retailers also hit a five-year high for the January to August period as consumers opened 24.6 million retail card accounts, according to Equifax. The total amount of new credit issued year-to-date climbed to $46.6 billion, an 11.6% increase from the same period last year.
A big reason for the surge in card borrowing is that more and more borrowers are paying their bills on time. Sixty-day delinquency rates dipped to 1.88% in October, down from 2.18% during the same month in 2012. Write-offs also fell during that period, dropping to 3.92%, compared to 4.81%.
The report suggests that credit card companies are loosening lending standards. The number of loans issued to subprime borrowers — people with Equifax credit scores below 660 — hit a six-year high, rising to 8.2 million year-to-date. That's a 15.8% increase from the same period in 2012.
Demand for automobile loans is also surging. Lenders originated $327.3 billion of auto loans in the first eight months of 2013, up 15.6% from the same time a year ago and most for that time frame in eight years, according to the report.