TransUnion Report Finds Consumers Looking to Credit Products to Make Ends Meet

A recent TransUnion report highlighting credit activity in Q4 of 2022 found that credit card balances hit a record $931 billion, which increased 18.5 percent from the fourth quarter of 2021. The number of consumers with a credit card rose to 166 million, up from 159.5 million in Q4 of 2021, and 152.6 million in Q4 of 2019 before the coronavirus pandemic.

“Whether it’s shopping for a new car or buying eggs in the grocery store, consumers continue to be impacted in ways big and small by both high inflation and the interest-rate hikes implemented by the Federal Reserve, which we anticipate may continue for at least a few more months,” said Michele Raneri, vice president of U.S. consulting and research at TransUnion, according to MarketWatch.

Quarter-over-quarter growth in credit card balances was largely driven by subprime and near-prime borrowers, who are likely majorly affected by increased interest rates. “The pressure that we’re seeing in the market—inflation and interest rates—are starting to produce hardships on people when they’re not able to pay their bills as well,” Raneri stated.

The report found that Gen Z’s credit card balances rose quickly, up 64 percent in Q4 compared to 2021, and their originations rose 19 percent from 2021. However, many of those consumers started at a lower balance level because more of them are coming of age each day, which makes the increases look more dramatic.

Additionally, unsecured personal loan balances hit a record $222 billion during the quarter, which was up from $167 billion in Q4 of 2021. Origination levels were highest in the first half of 2022, with subprime and near-prime consumers driving that growth.

“Some of the growth from earlier in the year is leading to rising delinquency rates among below-prime consumers in recent vintages, which is likely to continue,” said Liz Pagel, TransUnion’s senior vice  president of consumer lending. “Against this backdrop, lenders are likely to continue adjusting lending criteria to grow slowly in the upcoming quarter.”