The average level of credit card debt rose by 4.9% from July to September in a spending spree that leads into the back to school and holiday shopping periods. According to TransUnion, the average borrower now has $4,996 of credit card debt.
The statistics in TransUnion's latest report reflect that American defaults are also bottoming near their historic lows at .75%, slightly higher than the .71% delinquency rate as of last year. Considering the high rate of defaults on mortgages and car loans – loans which are secured by an asset homeowners and drivers cannot afford to lose – the default rate is quite low. Historically, credit cards are the first loan that goes without being paid when borrowers are squeezed by falling incomes.
Credit card companies are also more comfortable making more loans to more people. As a whole, the industry upped new card issuance by 3.1%. Growth was mostly from borrowers who are not considered prime borrowers. These borrowers made up 29.6% of all new credit card issuance, suggesting that credit card companies are more willing to add customers today than in the past.
All signs point to renewed spending but with more pause than in years past. While consumers rightfully see credit cards as the most convenient and safe way to make a payment, they're being more conservative in how they manage debt burdens. Lenders and credit agencies report that borrowers are quicker to pay down balances and more aggressive in making larger payments in excess of the minimum balance.