On September 29, 2021, the CFPB issued a Press release concerning its fifth biennial report to Congress As it concerns the consumer credit card market. The report found that the growth of the market in recent years reversed in 2020.
The report examines the market for potential harm to consumers and presents the latest research on the use, cost and availability of consumer cards. From a peak of $ 926 billion in 2019, credit card debt fell to $ 811 billion in the second quarter of 2020, the largest six-month decline on record, before reaching $ 825 billion at the end of the year.
“While public and private programs have helped consumers reduce their credit card debt during the pandemic, we at CFPB will ensure that families and individuals continue to struggle. [to] get the help they need, ”said Dave Uejio *, CFPB Acting Director. “Across the credit card market, consumers were seeking and using less credit, paying off debt, and lowering late payment rates to historically low levels. At the end of the pandemic relief efforts, the CFPB will use all of our tools to support a fair recovery. “(* Editor Remark: Thursday, September 30, 2021, the Senate confirmed Rohit Chopra as the new director of the CFPB.)
Since the passage of the Dodd-Frank Act in 2010, and in accordance with the Credit Card Liability and Disclosure Act 2009, the CFPB has submitted a report to Congress every two years on the state of the credit card market. consumer credit cards. The report released today highlights several metrics related to consumer credit card activity during the pandemic, including:
- Over 25 million consumer credit card accounts representing approximately $ 68 billion in outstanding credit card debt entered relief programs in 2020, significantly higher than in previous years;
- The share of accounts with a revolving balance declined in 2020, more consumers paid off their card debt in 2020, and existing cardholders paid off the highest share of their credit card debt in recent years;
- The total line of credit on all consumer credit cards declined slightly in 2020 from a high of over $ 4.5 trillion after the Great Recession in 2019, but remained above 2018 levels;
- The volume of credit card applications fell sharply in 2020 from its peak in 2019, with approval rates also falling, but not as sharply;
- Late payments and default rates have fallen to historically low levels, especially for consumers with scores below the premium;
- Consumers with lower than best scores saw the greatest restriction on the credit card line available, even as line usage declined;
- Digital engagement, whether it means signing up for online portals, signing up for mobile apps, e-statement membership rates versus paper equivalents, or paying credit card bills electronically. credit, steadily increasing in all age groups and almost all types of platforms; and
- Credit card issuers continued to make fewer phone calls for debt collection for overdue credit card accounts while increasing the use of e-mail for collection.
During the pandemic, many cardholders received direct federal assistance, improved unemployment benefits, and the suspension of payment and interest on student loans held by the federal government. Reinforcing these public efforts, credit card issuers have also provided relief to cardholders through payment deferrals and fee waivers. The report notes that it is still important for issuers to improve customer service and system reliability related to these relief programs and to ensure that their systems are operating in full compliance with applicable law, even if the Market continues to evolve with changing economic conditions as well as innovation in the card market and in competing product markets.
The CFPB indicated that the report reflects the continued work of the CFPB to ensure adequate consumer protection and a transparent and competitive market for all consumers, especially the most vulnerable. The report notes several specific areas of CFPB concern, including the failure of issuers to report payment amounts to credit bureaus and the practices of issuers with respect to credit line reductions, which will be the subject of review. additional work as the CFPB strives to promote fair recovery. The CFPB also intends to increase its use of demographic data in its future research.
Now that the Senate has confirmed Rohit Chopra as CFPB Director, it will be interesting to see the next steps the CPFB takes regarding these issues. Based on Mr Chopra’s previous stance on consumer issues, it is likely that he will continue the initiatives launched by interim director Uejio.