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Financial Services Law Insights and Observations

CFPB releases 2019 Card Report

Federal Issues CFPB Credit Cards CARD Act

Federal Issues

On August 27, the CFPB released its fourth biennial report on the state of the credit card market as required by Section 502 of the Credit Card Accountability Responsibility and Disclosure Act (CARD Act). The 2019 report covers the credit card market for the 2017-2018 period. In opening remarks, CFPB Director Kathy Kraninger notes that with the passage of time, it has become “increasingly difficult to correlate the CARD Act with specific effects in the marketplace that have occurred since the issuance of the Bureau’s last biennial report, and, even more so, to demonstrate a causal relationship between the CARD Act and those effects,” and therefore, future reports will focus more on overall market conditions. Key findings of the report include, (i) total outstanding credit card balances continue to grow; (ii) total cost of credit stood at 18.7 percent at the end of 2018, which is the highest overall level observed by the Bureau in its biennial reports; (iii) total credit line across all consumer credit cards reached $4.3 trillion in 2018, which is largely due to the increase in unused credit lines held by superprime score consumers; and (iv) consumers are increasingly using their cards through digital portals, including those accessed via mobile devices.

Regarding current trends, the report notes that over the last few years, the total amount of credit card spending has grown “much faster” than the total volume of balances carried on the cards. In addition, while cardholders with prime or superprime credit scores still account for most debt and spending, lower credit score consumers have been increasing their debt at a faster rate than cardholders with higher credit scores. Notably, delinquency and charge-off rates still remain lower than they were prior to the recession, even though they have slightly increased in recent years. Additionally, since the last report, issuers have lowered their daily limits on debt collection phone calls for delinquent accounts and average daily attempts remain “well below” stated limits. Issuers are also beginning to supplement communications for account servicing with email and text messages.

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