Credit Card Use Rises Amid Inflation, But That’s Not a ‘Red Flag’

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The best indicator of whether someone can pay their bills or not is whether they have a job.

Michele Raneri

Vice President of US Research and Consulting at TransUnion

Still, experts say the jump in usage alone isn’t a sign of trouble.

“I don’t see anything that I would really declare as a red flag,” according to Michele Raneri, vice president of US research and consulting at TransUnion.

“The unpaid increases”

Dan Brown Sword | Source of images | Getty Images

As the number of credit card accounts in the United States increases, more and more new customers are subprime borrowers, which generally means those with a credit score of 600 or lower, according to TransUnion, in part because of the flood of young borrowers who have access to credit cards.

At the same time, “delinquencies are increasing and approaching what they were before the pandemic,” Raneri said. “But that doesn’t necessarily mean it’s bad.”

As lenders expanded access, delinquencies rose but remained close to “normal” levels, according to the report. TransUnion defines a default as a payment that is 60 days or more late.

Employment is “the strongest indicator” of reimbursement

“Consumers face several challenges that impact their finances daily, including high inflation and rising interest rates,” Raneri said. “These challenges, however, are occurring in a context where employment opportunities are still abundant and unemployment levels remain low.”

As long as “people have a job”, she added, “they can better understand everyday life”.

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