More Americans Than Ever Hold Credit Cards at the End of 2021

TransUnion’s recent Q4 2021 Quarterly Credit Industry Insights Report (CIIR) report found that a record 196 million Americans held credit cards at the end of 2021, with a growing number of cards being issued to consumers with lower credit scores. 20.1 million new cards were issued by the third quarter of the year, and nearly 9 million of that share went to nonprime borrowers.

Capital One Financial spent nearly $1 billion on marketing from October 2021 to December 2021, double what it spent in the first quarter. “I am struck by how the consumer is in a very good place right now,” said Capital One Chief Executive Richard Fairbank in an earnings call last month, as reported by American Banker. He noted the strength of consumers with “everybody sort of roaring out of the pandemic.”

Lenders have increased competition and marketing campaigns over the past year, eager to reach consumers who have been able to meet their obligations after pandemic-related stimulus programs ended. Interest rates charged on cards were at record highs last year relative to risk-free rates on Treasury debt.

Consumers remained cautious with new cards throughout the year; the average balance per borrower was $5,127, which hardly changed from Q4 2020 and remained lower than pre-pandemic levels.

A risk credit card issuers may face is that unless student loan repayments are paused or forgiven again, millions of consumers will have to meet loan obligations in May when the forbearance period ends, which could force many households to make important budget decisions.

“For a portion of those consumers, that will mean less disposable income available for discretionary purchases, that could result in lower amounts being added to card balances each month,” said Charlie Wise, senior vice president of research and consulting at TransUnion.