New Bank Credit Card Originations Rise More Than 28 Percent From 2010

Equifax has announced the release of its National Credit Trends report for the February 2011 timeframe. Notable in particular was an uptick in subprime (credit score of under 660) bankcard originations.

Notable within the data is that lenders continue to expand the subprime category with Feb. 2011 subprime bankcard originations* up by more than 75 percent over Feb. 2010 numbers, and total new subprime bankcard credit up by more than 66 percent.
Total new bankcard credit limits are increased by more than 27 percent YOY, as a result of reflective of the increase in total new bankcard volume. Other key findings:
• Individual new bankcard average credit limit decreased slightly from the previous year (Feb. 2011 average of $4,008 vs. Feb. 2010 average of $4,086)
• Average subprime bankcard credit limit has decreased slightly as well, from $1,025 (Feb. 2010) to $977 (Feb. 2011)

The reduced new account credit limits are evidence of issuers’ caution in underwriting new accounts. Mercator notes that while originations may be rising, the number of bankcard accounts on file is only just stabilizing after a significant drop since 2008. This suggests that increased originations are about balancing the high levels of account attrition driven by account charge-offs, closing of inactive accounts, and voluntary account closures.

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