Credit card use increased with the improving economy

Consumers used their credit cards more the second quarter as jobs and economic growth picked up pace, a new survey showed on Wednesday.

An American Bankers Association’s report shows an increase in the number of new accounts and a rise in monthly purchases during the April-June quarter, compared with the first three months of the year, while more consumers paid off their monthly balances.

“Strong economic growth in the second quarter offset declines in the first quarter,” said Molly Wilkinson, executive director of ABA’s Card Policy Council.  

“The significant economic growth we’ve seen in recent months makes it likely that credit card market trends will continue for the remainder of 2014 and beyond.”

Purchase volumes rose 14.3 percent for subprime accounts, 10.3 percent for prime accounts and 8.2 percent for super-prime accounts.  

The rebound is consistent with other indicators showing improving consumer confidence as well as an increase in spending.

Similarly, the number of new accounts increased across all risk categories, with new account volumes up 10 percent over last year.

Among all account holders, those who pay their balance in full increased 0.6 percentage points to 29 percent, while dormant accounts increased 0.8 percentage points to 29.8 percent.  

Meanwhile the share of those who carry balances fell 1.5 percentage points to 41.2 percent.

“The shift away from revolvers reflects a changing consumer marketplace,” Wilkinson said.  

“More and more consumers are using their credit card as a payment tool rather than a form of debt."