Credit card balances surged in the fourth quarter, but new card originations slowed as banks tightened lending standards, according to a recent TransUnion report.
Credit card balances hit a new benchmark in the fourth quarter of 2023, with balances topping the $1 trillion mark for the first time, according to a recent TransUnion report.Balances increased by 13% over the previous year across all risk tiers, led by subprime, which grew 32% to $105 billion, the report said. Even as interest rates soared, the average balance grew to $6,360. The Federal Reserve has raised interest rates 11 times since 2022 to lower sky-high inflation to a 2% target rate.
"A pullback in non-prime issuance was a primary driver in the decline in 2023 originations and breaks the historical seasonal pattern," Paul Siegfried, TransUnion senior vice president and credit card business leader, said. "While delinquencies in Q4 2023 were elevated, they were in line with the expected forecasts given historic non-prime originations and balance growth.
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