Oct 13 2009

Credit Card Availability, Interest Rates, and Usage in 2005-2009

Report  
Number  
196

In this research brief, we present some of the general trends in economy-wide credit card delinquencies, debt volumes, interest rates, and usage.

Mark Meyer
Mark Meyer
President + CEO
Filene Research Institute
Luis Dopico
Luis Dopico
Economist
Report Number 196

Executive Summary

Credit Card Availability, Interest Rates, and Usage in 2005–2009 is the fourth report in a series of Consumer Finance Research briefs based on information derived from the Ohio State University’s Consumer Finance Monthly (CFM) survey. 

Credit cards are one of the many innovations in financial services that over the last few decades have made credit more widely available, generally cheaper, and more convenient for many. Like many other financial market instruments over recent decades, credit cards have experienced both overall growth and occasional upheavals, including frequent calls for reform and periodic changes in regulation and legislation

What is the research about?

This research brief examines five key areas related to consumers and credit cards:

  • General trends in credit card delinquencies, debt volumes, and interest rates over the last two decades. 
  • CFM household-level data on availability, interest rates, and usage of credit cards across various sets of consumer characteristics. 
  • Credit card availability before and during the current financial crisis. 
  • Difficulties in setting (and regulating) credit card interest rates. 
  • A set of key strategic implications for credit unions based on this research brief’s findings.

What are the credit union implications?

While many credit unions will undoubtedly have to adjust parts of their pricing and risk-management models, the key credit union attraction for many consumers will likely remain their offering relatively simpler products with fewer fees. With many customers completely turned away from other lenders, credit unions have an opportunity to build new credit card relationships, even if those relationships should probably start with relatively low borrowing limits and somewhat higher interest rates.