For the seventh consecutive quarter, TransUnion’s Credit Risk Index fell, indicating that consumers are eliminating their debts and defaulting on payments in fewer numbers. The index is down from 121.22 to 120.62, a 4.9 percent drop since last year.
“Increases in the percentage of consumers with new accounts with generally higher credit limits, coupled with lower utilization rates for revolving account types reflect a healthier balance of risk, said global chief scientist for TransUnion Chet Wiermanski.
This comes as figures on consumer spending trickle in from Black Friday and Cyber Monday, which has thus far indicated a rise of 7.4 percent in credit card usage for holiday spending since last year, as reported by the Chicago Tribune. Credit card issuers have been incentivizing credit usage by boosting rewards and cash back programs, a move that is interpreted as a means of recouping losses from swipe fees attributed to the Durbin amendment of the Frank-Dodd Act, which capped debit swipe fees at 21 cents per transaction.
According to research firm Mintel Comperemedia, credit card mailings have increased 85 percent since early 2010. Consumers are encouraged to take advantage of various rewards programs, but cautioned to not let the rewards incentivize going into debt, which can in effect nullify any rewards earned through interest charges.
Lenders are making new credit available to an increasing percentage of consumers, who, in turn, are conservative with their use of it, Wiermanski said. “Continued responsible use and repayment of credit by consumers during the rest of 2011 should modestly improve the CRI to levels witnessed just prior to the early stages of the credit and mortgage crisis.
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