Subprime consumers now enjoy a greater choice of credit cards, and according to the industry report by TransUnion (NYSE:TRU), the rates of delinquency continued to be low. The delinquency rate of credit cards continued to hold its level at 1.19 percent during the second quarter of 2015. It was 1.17 percent during the second quarter of 2014.
Lower and lower
Similar to subprime credit tier originations, the credit line given to subprime consumers with new accounts went on its usual path to dip in the second quarter of 2015. In this tier, the new credit line declined to $923 on an average by the second quarter of 2012. The account lines touched $896 reached its lowest level from the time of second quarter in 2012.
According to Paul Siegfried of TransUnion, even as subprime consumers gained a credit pipeline, the lenders have pushed back average newer credit lines given to this group. He said that the originations distribution across the risk tiers remained steady during the past year. This indicates of deliberate action taken by lenders and they are cautiously approaching the subprime originations.
New account originations
When arrears of one quarter is viewed, the new account originations rose 11.2 percent from about 11.7 million in the first quarter of 2014 to about 13.1 million in the first quarter of 2015. The subprime risk tier is the major cause of new account originations, with a major 18 percent chunk. This is an upside from 14.7 percent during the first quarter of 2014.
For every borrower, the median credit card balance dropped from $5,234 in second quarter of 2014 to $5,199 in second quarter of 2015. Average balance rose 1.1 percent in consecutive quarters, from $5,142 during the first quarter of 2015. Consumers in the Super Prime category experienced the biggest median balance growth, an increase of 1.4 percent from the $2,316 in the second quarter to $2,349 in the second quarter of 2015.
According to Siegfried, the number of under age 30 consumers with credit card balance increased to about 20.73 million during the second quarter of 2015. This is an 8.6 percent upside from 19.09 million during the identical period in 2014. When it came to delinquency rates, the consumer group consistently remained above national average during the second quarter of 2015 clocking at 1.80 percent. The median balance for this below 30 age group increased $19 from the second quarter $2,135 during 2014 to $2,154 during the identical quarter in 2015.