Economists are reporting that more credit card accounts were opened last year than in recent years past. It is believed that this is due to the banking industry loosening some of the regulations they had imposed in recent years due to the recession.
Economists are reporting that more credit card accounts were opened last year than in recent years past. It is believed that this is due to the banking industry loosening some of the regulations they had imposed in recent years due to the recession.
Data about the rise in credit card accounts was provided by TransUnion. The statistics show that new cards issued rose by fourteen percent last year. This brought the total number of cards to roughly forty two million. Interestingly enough, about ten million of those cards were issued to people who have lower than average credit scores.
This doesn’t necessarily mean that the economy is suddenly going right back to the way it was pre-recession. Even with the recent lax in restrictions, lending standards are still much tighter than they were pre-recession.
But experts with TransUnion believe that because of the recession there has been a shift for tougher competition between businesses to earn the loyalty of customers with the best scores. This fierce competition is driving some banks away from being able to compete for the loyalty of those with the highest credit scores, and so they have to start working with lower credit score individuals. In fact this is the second straight quarter that has led to subprime consumers receiving more credit opportunities than in the past.
Economists suspect that one of the reasons for this increase is due to the types of subprime borrowers from before the recession, and the types of subprime borrowers from during the recession. Many of the borrowers who had racked up huge debts on their cards that they were then incapable of paying back have been moved out of the borrowers market. Other borrowers who have lower credit scores because of innocent mistakes or other such circumstances, those who are still trying to pay off their debts, are receiving more and more trust from larger banking companies.
Of course banking companies are also taking into consideration the fact that the rate of late payments has vastly decreased over the past two years. Less than one percent of card holders had a late payment for more than 90 during the fourth quarter last year. Though the rate is raised ever so slightly since the third quarter of last year, it also reflects the lowest rate for the fourth quarter since 1995.
Financial experts are also saying that this indicates that people are valuing making payments to their credit card more than they are valuing the payments to their mortgage these days. This is the opposite of how consumers prioritized payments before the housing crisis and unemployment recession.
Reputable credit agencies should understand that at times some people can fall on hard times and have difficulty maintaining a good credit score. No matter how good a person may be at financial planning, sometimes bad things happen to good people. That means that there are plenty of opportunities for those who have fallen on hard times to get help!
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