New Government Data on Credit Cards

The Consumer Financial Protection Bureau (CFPB) released a data report on credit cards on July 2. The report found that most Americans use credit cards as a means to borrow money, and many sustain debt on those cards month-after-month. 

The report’s data derives from the CFPB’s Credit Card Database that covers about 85 percent of all U.S. credit card accounts. Credit accounts are divided into four groups in the report: 

• Inactive – an account that has no purchases, balances, or payments during the current and previous billing cycle; 
• Transactors – an account that has been paid in full during the current or previous billing cycle;
• Revolvers – an account that has a balance in the current or previous billing cycle; and
• Transititoners – an account that transitions between inactive, transactor, or revolver. 

The report finds that about 40 percent of all credit card accounts are inactive, which has been gradually decreasing since 2008. This is largely a result of stricter underwriting standards and lenders’ decision to shutdown unused credit lines. Just under 20 percent of accounts are transactors, which has gradually increased since the 2008 financial crisis. About 30 percent of accounts are revolvers, which has held relatively steady over the past decade, and ten percent are transitioners.  

The report also analyzed account types by credit score. Unsurprisingly, credit card accounts are more likely to be inactive (perhaps as a result of wealthier individuals having more credit card accounts) and transactors as an account holders’ credit score rises. In contrast, those with high credit scores are much less likely to have revolver accounts. 

The report concludes that although credit cards can be used to pay for things in a safe and convenient way, many Americans use them as a means to borrow and end up sustaining balances on them month-after-month. “It found that more often than not those using their cards borrow on them, and that this revolving state is persistent.”