Americans Return to Credit Cards

According to data from Equifax, there are more credit cards being used today than a year ago. Two reasons that could account for this increase in usage are that the market for subprime borrowers is going up and that the holiday season is once again encouraging customers to use their credit cards more often for holiday purchases.

There were roughly 25 million credit accounts open for the period between January and August. This represents a jump from 20 million accounts that were open during that same time period a year ago. It is not just banks that are issuing more credit cards, it is also retailers that are getting into the act. Retailers increased the number of cards that they issued by 7 percent, or up to 21 million cards issued.

Why are consumers being offered new credit cards? One of the reasons why there was a lack of available credit in the past was that the subprime market was practically ignored. For consumers with a credit score of less than 600, it was hard to get a lender to work with. However, there was a 56 percent jump in the number of cards issued for those with a credit score of 600 or lower over the past year.

Another reason why credit cards are now making a "comeback" is that the holidays are in full swing and that momentum began even earlier thank Thanksgiving this year. A lot of consumers will shop online and that requires the use of a credit card in most cases. Consumers also like to use their credit cards to try and put off paying for purchases until later, or to allow them to spend a little bit more on loved ones. Card issuers will certainly be looking to take advantage of that.

Credit cards will continue to be used by people, regardless of the recession, or whatever debt reduction strategies they are trying as they make it easier and faster to purchase products and services, whether online or at a brick and mortar location. The majority of consumers need credit from time to time, and during the holiday season cost and future debt might be thrown out the window to get the ones we love something really special. Since this is the case, banks are going to try to increase their profits and continue issuing cards for the foreseeable future.

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