More than eight million consumers stopped actively using bank-issued, general purpose credit cards over the past year, according to a quarterly analysis from credit bureau TransUnion.
The company attributed it in part to charge-offs in the higher-risk segment of the population, more conservative spending by lower-risk consumers, and efforts by all segments to maintain healthy relationships with their credit card issuers just in case they need that lifeline in the future.
Interestingly, consumers with higher incomes were just as likely to suspend credit card use as consumers with lower incomes.
“The vast majority of the consumers who do not possess or have stopped using credit cards continue to have and use other forms of revolving and installment credit, and of course still need to pay for necessities,” said Ezra Becker, vice president of research and consulting in TransUnion’s financial services business unit, in a press release.
TransUnion said more than 70 million consumers did not have an active, general-purpose bank issued credit card in 2009, but noted that these consumers still have a need for other payment vehicles.
That includes debit cards, charge cards, and credit card issued by companies that don’t fall under the bank-issued umbrella.
So it could be more of a shift in business rather than the trend of reduced credit usage.
The company also revealed that the national credit card delinquency rate (borrowers 90 days or more delinquent on one or more of their credit cards) decreased to 0.83 percent in the third quarter, down nearly 9.8 percent from the previous quarter.
Year over year, credit card delinquencies fell by a whopping 24.6 percent, though as noted earlier, many could be attributed to charge-offs, where credit card issuers essentially agree to take their losses and give up on recouping the debt.
Related: How to cancel a credit card.
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