1 BUREAU OF CONSUMER FINANCIAL PROTECTION — CONSUMER CREDIT CARD MARKET REPORT

BUREAU OF CONSUMER FINANCIAL PROTECTION | AUGUST 2019

The Consumer Credit Card 

Market
2 BUREAU OF CONSUMER FINANCIAL PROTECTION — CONSUMER CREDIT CARD MARKET REPORT

Message from 

Kathleen L.

Kraninger

Director of the Bureau of Consumer 

Financial Protection

Credit cards are one of the most commonly-held and widely-used financial products in America. 

At last count, nearly 170 million Americans hold credit cards, many of them carrying more than 

one. Some consumers use these strictly as payment devices, paying their balances in full each 

month, while others use them as a source of credit and carry a balance from month to month. 

The Credit Card Accountability Responsibility and Disclosure Act (CARD Act) requires the 

Bureau to prepare a biennial report to Congress regarding the consumer credit card market. 

This is the Bureau’s fourth report, and details findings regarding, among other things, the cost 

and availability of credit and innovations in the credit card marketplace. The report also 

emphasizes that with the passage of time, it is becoming 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. Accordingly, while the Bureau will continue to report on the 

CARD Act’s effects where appropriate and feasible, the Bureau anticipates future reports will 

focus more on overall conditions in the credit card market.

Evidence-based research like this is one way in which the Bureau discharges its statutory duty to 

monitor for risks to consumers in the offering or provision of consumer financial products and 

services. It is my hope that the publication of this report with the latest data on this important 

market will be useful to consumers, providers of credit card products, and policymakers. 

Sincerely, 
3 BUREAU OF CONSUMER FINANCIAL PROTECTION — CONSUMER CREDIT CARD MARKET REPORT

Kathleen L. Kraninger
4 BUREAU OF CONSUMER FINANCIAL PROTECTION — CONSUMER CREDIT CARD MARKET REPORT

Table of contents

Message from Kathleen L. Kraninger........................................................................2

Table of contents.........................................................................................................4

Executive summary.....................................................................................................6

1. Introduction.........................................................................................................15

1.1 Review mandate.......................................................................................15

1.2 Report scope ........................................................................................... 16

1.3 Methodology ............................................................................................17

2. Use of credit........................................................................................................26

2.1 Market-level metrics ...............................................................................26

2.2 Consumer use metrics ............................................................................30

2.3 Delinquency and charge-off....................................................................39

2.4 Usage of digital servicing........................................................................ 47

3. Cost of credit.......................................................................................................55

3.1 Total cost of credit .................................................................................. 55

3.2 Interest charged ...................................................................................... 57

3.3 Fees assessed........................................................................................... 61

4. Availability of credit............................................................................................72

4.1 New accounts .......................................................................................... 72

4.2 Existing accounts ....................................................................................90

5. Practices of credit card issuers.........................................................................99

5.1 Rewards...................................................................................................99
5 BUREAU OF CONSUMER FINANCIAL PROTECTION — CONSUMER CREDIT CARD MARKET REPORT

5.2 Balance transfers................................................................................... 106

5.3 Cash advances ....................................................................................... 109

6. Scholarship on CARD Act effects ...................................................................113

6.1 Direct effects ..........................................................................................116

6.2 Overall effects.........................................................................................127

7. Credit card debt collection ..............................................................................137

7.1 Debt collection markets .........................................................................137

7.2 Collections prior to charge-off.............................................................. 140

7.3 Recovery following charge-off .............................................................. 152

7.4 Special topics in credit card collections................................................ 166

8. Innovation .........................................................................................................170

8.1 Account servicing innovation ................................................................ 171

8.2 Innovation at the physical point-of-sale................................................179

8.3 Risk management innovation............................................................... 182

Appendix A: Supporting figures........................................................................191
6 BUREAU OF CONSUMER FINANCIAL PROTECTION — CONSUMER CREDIT CARD MARKET REPORT

Executive summary

Credit cards are central to the financial lives of nearly 170 million American consumers. Over 

the last few years, the credit card market, the largest U.S. consumer lending market measured 

by number of users, has continued to grow in almost all dimensions and measures. Market 

conditions remain stable, in large part because of low unemployment, modest wage growth, and 

high consumer confidence in the past two years. Credit cardholders continue to use their cards 

to facilitate transactions, smooth consumption, and earn rewards, all with the added security of 

stringent limitations on liability. Consumer satisfaction with credit cards remains high,1

1 J.D. Power reported that in 2018 consumer satisfaction with credit cards remained near its record high. See Press 

Release, J.D. Power, Credit Card Rewards Battle Continues as Customers Seek Better Programs, J.D. Power Finds

(Aug. 16, 2018), available at https://www.jdpower.com/business/press-releases/2018-credit-card-satisfactionstudy. 

while 

consumers’ debt service burden remains near its lowest level recorded in more than a decade.

Late payment and default rates have risen modestly over this period but remain below prerecession levels. In general, credit card issuers continue to generate profitable returns consistent 

with historical levels. Innovation has continued to reshape the market, for both users and 

providers. New providers, including large and small financial institutions as well as startup and 

mainstream technology companies have entered—or are in the process of entering—the market 

with competing products, features, and new ways of issuing credit cards.2

2 Reference in this report to any specific commercial product, service, firm, or corporation name is for the 

information and convenience of the public, and does not constitute endorsement or recommendation by the Bureau. 

 

The Credit Card Accountability Responsibility and Disclosure Act (CARD Act or Act)3 was 

enacted ten years ago. Since its passage, researchers, including the CFPB, have studied the 

 

3 Pub. L. No. 111-24, 123 Stat. 1734 (2009). 
7 BUREAU OF CONSUMER FINANCIAL PROTECTION — CONSUMER CREDIT CARD MARKET REPORT

effects of the CARD Act on the cost and availability of credit to consumers. This report discusses 

that research. However, the Bureau also emphasizes that with the passage of time, it is becoming 

increasingly difficult to correlate the CARD Act with specific effects in the marketplace that have 

occurred since the issuance of the Bureau’s most recent biennial report, and, even more so, to 

demonstrate a causal relationship between the CARD Act and those effects. Accordingly, while 

the Bureau will continue to report on the CARD Act’s effects where appropriate and feasible, the 

Bureau anticipates that future reports will focus more on overall conditions in the credit card 

market. 

This executive summary provides some background for the report, then summarizes key 

findings.

BACKGROUND

In 2009, Congress passed the CARD Act.4

4 The Act superseded a number of earlier regulations that had been finalized, but had not yet become effective, by the 

Office of Thrift Supervision (OTS), the National Credit Union Administration (NCUA), and the Board of Governors 

of the Federal Reserve System. Those earlier rules were announced in December of 2008 and published in the 

Federal Register the following month. See 74 Fed. Reg. 5244 (Jan. 29, 2009); 74 Fed. Reg. 5498 (Jan. 29, 2009). 

The rules were withdrawn in light of the CARD Act. See 75 Fed. Reg. 7657, 75 Fed. Reg. 7925 (Feb. 22, 2010). 

5 See Bureau of Consumer Fin. Prot., Card Act Report, (Oct. 1, 2013) (2013 Report),

The Act made substantial changes to the credit card 

market. The CARD Act mandated new disclosures and underwriting standards, curbed certain 

fees, and restricted interest rate increases on existing balances. Among the CARD Act’s many 

provisions was a requirement that the Board of Governors of the Federal Reserve System 

(Board) report every two years on the state of the consumer credit card market. With the 

passage of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) 

in 2010, that requirement passed to the Bureau of Consumer Financial Protection (Bureau) 

alongside broader responsibility for administering most of the CARD Act’s provisions. This is 

the fourth report published pursuant to that obligation, building on prior reports published by 

the Bureau in 2013, 2015, and 2017.5

 

http://files.consumerfinance.gov/f/201309_cfpb_card-act-report.pdf; Bureau of Consumer Fin. Prot., The 

Consumer Credit Card Market, (Dec. 2015)(2015 Report), 
8 BUREAU OF CONSUMER FINANCIAL PROTECTION — CONSUMER CREDIT CARD MARKET REPORT

The Bureau’s 2013 Report focused on trends in the credit card marketplace before and after the 

CARD Act. Because the implementation of the Act coincided with a period of economic recovery, 

the effects of the CARD Act were difficult to discern. The Bureau found that the CARD Act 

“significantly enhanced transparency for consumers” and largely eliminated “[o]verlimit fees 

and repricing actions.”6 The report found that from early 2009 and continuing through 

February 2010 when many provisions of the Act took effect, the interest rate on credit card 

accounts increased. But because back-end fees also decreased across this period the total cost of 

credit “declined by 194 basis points from Q4 2008 to Q4 2012.”7

7 The report defined total cost of credit as the annualized sum of all amounts paid by consumers (including both 

interest charges and fees) divided by the average of outstanding balances. See id.

8 According to the Bureau’s data, total credit line was $200 billion lower at the end of 2012 than when many 

provisions of the CARD Act took effect in February 2010. See id. at 6.

The report was not able to 

conclude how much of that change was attributable to the CARD Act. The report also noted 

declines in credit availability beginning in 2008, prior to the enactment of the CARD Act, but 

after the onset of the Great Recession. Certain metrics, such as total credit line, continued to 

decrease after the implementation of CARD Act provisions, with their effect disproportionately 

concentrated in subprime tiers.8 With some exceptions, the report was not able to conclude the 

extent to which such change resulted from the Act. However, the report did find evidence that 

suggests the CARD Act had a discernible impact on credit availability in three respects—a 

substantial decrease in the number of credit card accounts originated among students and other 

consumers under the age of 21, a small but discernible percentage of applicants deemed 

otherwise creditworthy were declined as a result of insufficient income to satisfy the CARD Act’s 

 

http://files.consumerfinance.gov/f/201512_cfpb_report-the-consumer-credit-card-market.pdf; Bureau of 

Consumer Fin. Prot., The Consumer Credit Card Market, (Dec. 2017) (2017 Report), 

https://files.consumerfinance.gov/f/documents/cfpb_consumer-credit-card-market-report_2017.pdf. The Bureau 

also held a conference in 2011 in which numerous market stakeholders contributed information and perspective on 

developments in the credit card market. See Press Release, Bureau of Consumer Fin. Prot., CFPB Launches Public 

Inquiry on the Impact of the Card Act (Dec. 19, 2012), available at https://www.consumerfinance.gov/aboutus/newsroom/consumer-financial-protection-bureau-launches-public-inquiry-on-the-impact-of-the-card-act. 

6 See 2013 Report, supra note 5, at 5.
9 BUREAU OF CONSUMER FINANCIAL PROTECTION — CONSUMER CREDIT CARD MARKET REPORT

ability-to-pay requirement, and a marked decline in the percentage of consumers receiving 

unsolicited credit line increases.9 

The Bureau’s 2015 Report had a broader scope. It continued to assess post-CARD Act trends, 

generally corroborating the prior report and finding that most of the market trends identified in 

that 2013 Report had persisted over the next two years. The 2015 Report also laid out a broader 

set of market indicators, establishing potential baselines against which to measure the evolution 

of the market in future reports. In addition, the report included several in-depth analyses of 

certain issuer practices in the market—deferred interest promotions, rewards cards, and debt 

collection.

The Bureau’s 2017 Report provided similar coverage of post-CARD Act trends. It found the cost 

of card credit remained “largely stable,” and that by most measures credit card availability 

“remained stable or...increased” since the 2015 Report.10 It repeated the debt collection analysis 

and added two new subjects: credit card products marketed to and used by consumers who lack 

prime credit scores; and issuer and consumer use of rapidly emerging “third-party comparison” 

websites.

THE 2019 REPORT

This report continues the approach of the Bureau’s previous reports. The Bureau revisits most of 

the same baseline indicators as prior reports to track key market developments and trends. It

also revisits some of the 2015 in-depth topics to assess how the market has changed. For 

example, the current report updates the debt collection analysis first conducted in the 2015 

Report. In addition, this report reviews significant findings from economics scholarship focused 

on the CARD Act.

Below is a summary of the core findings from each section of the report: 

 Total outstanding credit card balances have continued to grow and at year-end 2018 were

nominally above pre-recession levels. Throughout the post-recession period, including the 

 

9 See id.

10 See 2017 Report, supra note 5, at 7-8.
10 BUREAU OF CONSUMER FINANCIAL PROTECTION — CONSUMER CREDIT CARD MARKET REPORT

period since the Bureau’s 2017 Report, purchase volume has grown faster than outstanding 

balances. After falling to historical lows in the years following the recession, delinquency and 

charge-off rates have increased over the last two years. Late payment rates have increased 

for new originations of general purpose and private label cards, both overall and within 

different credit tiers. 

 The total cost of credit (TCC) on revolving accounts has increased over the last two years and 

in 2018 stood at 18.7 percent, which is the highest overall level observed in the Bureau’s 

biennial reports. Recent TCC increases are largely the result of increases in the indices

underlying variable rates, such as the prime rate. General purpose cards, which generally 

have interest rates linked to the prime rate, have driven the increase across every credit tier. 

TCC has fallen over the last two years for private label cards, in part because relatively fewer 

of these cards have rates linked directly to index rates, offset by a decline in fees as a share of 

balances. 

 Most measures of credit card availability—overall and across credit score tiers—have 

remained stable or decreased slightly since the Bureau’s 2017 Report. Measured by 

application volume, consumer demand for credit cards peaked in 2016. Approval rates have 

also declined slightly since 2016. Driven by lower approval rates, annual growth in the 

number of credit card accounts opened and the amount of credit line on new accounts has 

also leveled off. Even so, total credit line across all consumer credit cards reached $4.3 

trillion in 2018, nearly equal to its pre-recession high, largely due to the growth in unused 

line on accounts held by consumers with superprime scores.

 Cardholders have increased their use of rewards cards, thereby driving up the cost to 

industry to fund these products. The level and consumer cost of balance transfer and cash 

advance use remains largely unchanged. 

 In the ten years since the CARD Act was passed, social scientists have examined the Act’s 

effects on consumers and the credit card market as a whole. Using a range of theoretical and 

empirical approaches, scholarship has looked at a range of potential direct and indirect 

effects of the CARD Act, including pricing, credit availability, consumer repayment behavior, 

and cardholding. 

 Since the 2017 Report, issuers have lowered the range of their daily limits on debt collection 

phone calls for delinquent credit card accounts. In addition, over that same period, the 
11 BUREAU OF CONSUMER FINANCIAL PROTECTION — CONSUMER CREDIT CARD MARKET REPORT

volume of balances settled through for-profit debt settlement companies (DSCs) grew at a 

faster rate than issuers’ overall accounts receivable did.

 New technologies further enhance consumers’ interactions with and control over their credit 

cards—from originating one card rather than another, to ways of transacting and paying. 

Cardholders increasingly use and service their cards through digital portals, including those 

accessed via mobile devices. New technologies such as artificial intelligence and machine 

learning, as well as new data sources, are changing how providers are able to manage risk

and provide customer service. 

USE OF CREDIT

The credit card market is one of the United States’ largest consumer financial markets and

continues to grow by most measures. By the end of 2018, total credit card balances were around 

$900 billion, well above their pre-recession peak of $792 billion. Over the last few years, the 

total amount of spending using credit cards has grown much faster than the total volume of 

balances carried on cards. At $4.3 trillion, the aggregate of credit card lines extended (total line) 

is near its pre-recession high, while cardholding incidence remains further from its historic 

high. 

Cardholders with prime or superprime credit scores continue to account for most credit card 

debt and spending. However, in the last few years, the share of total credit card debt held by 

consumers with relatively lower credit scores has been increasing. Cardholders with lower 

scores have also increased the average number of credit cards they hold. In addition, average 

credit card debt has risen faster for these cardholders over the last few years than it has for 

cardholders with higher scores, although all credit tiers have seen some growth in average 

outstanding balances. Aggregate credit card indebtedness for consumers with lower scores, 

however, remains below 2008 peaks. 

For all credit score tiers, the share of cardholders revolving a balance continues to be higher for

general purpose cards than private label ones. Private label revolving rates continue to show 

more variation across credit tiers. Payment rates on general purpose payment cards have 

continued their steady growth since the recession, whereas private label payment rates have 

declined in recent years.

Rates of credit card delinquency and charge-off have declined sharply since their peak during 

the recession, and remain lower than they were prior to the recession. Both indicators have 
12 BUREAU OF CONSUMER FINANCIAL PROTECTION — CONSUMER CREDIT CARD MARKET REPORT

increased slightly in recent years. Newer originations, both overall and within each different 

credit tier, are showing greater incidence of late payment than older originations did after the 

same period. Recent private label vintages in particular show one-year cumulative delinquency 

rates in excess of historical norms, both overall and within different credit tiers.

COST OF CREDIT

The total cost of credit on revolving accounts has increased over the last few years, driven largely 

by increases in interest charges. In 2018, the average annual percentage rate (APR) for general 

purpose and private label cards rose to 20.3 and 26.4 percent respectively. This is in large part 

the result of changes in prevailing market rates. 

Annual fee volume has risen significantly over the last few years, leading to an increase in 

annual fees as a share of total fees. Fee composition otherwise shows relatively little change. 

Annual fees averaged roughly $80 per card in 2018. That amount has been increasing steadily 

for all credit score tiers reflecting, in particular, the increased prevalence in the past two years of 

richer rewards credit cards with higher annual fees. The prevalence for cardholders with belowprime scores, however, has been declining since 2015.

AVAILABILITY OF CREDIT

Consumers’ demand for credit as measured by application volume reached its peak in 2016 and 

declined somewhat in 2017 and 2018 in both general purpose and retail cards. Approval rates 

have also declined slightly since 2016. As a result, new credit card openings are lower than the 

post-recession high reached in 2016, both overall and for every credit tier. Total credit line on 

new accounts, both overall and within every credit tier, is down from its 2016 high point. Total 

credit line across all consumer credit cards reached $4.3 trillion in 2018, nearly equal to its prerecession high. Despite this picture of increasing credit availability, most of the growth in 

available credit is accounted for by unused line on accounts held by consumers with superprime 

scores. 

Consumers are increasingly obtaining credit cards through digital channels. Direct mail volume 

continues to fall. More consumers are finding their way to application pages via digital 

advertisements or third-party credit card comparison sites. More consumers are also applying 

for credit on their mobile devices. In 2018, applications submitted via mobile devices surpassed 

those submitted using desktop personal computers as the leading digital channel. The growth in 

the mobile channel has been significant in the past two years for both general purpose and retail 
13 BUREAU OF CONSUMER FINANCIAL PROTECTION — CONSUMER CREDIT CARD MARKET REPORT

cards. Mobile application use is also disproportionately heavy for consumers with lower credit 

scores, even as approval rates for these channels and consumers have held relatively steady. 

PRACTICES OF CREDIT CARD ISSUERS 

Credit cards offering points, miles, cash back, or other rewards remain popular, with the share 

of credit card spending accounted for by rewards cards continuing to increase over the last few 

years. That is true both overall and for each of the main credit tiers with growth particularly 

notable for consumers with lower credit scores. While rewards cards continue to account for a 

larger share of total credit card spending, the share of originations that are rewards cards 

declined in all credit score tiers except superprime. Meanwhile, the cost of offering rewards has 

risen over the past several years as issuers continue to compete using richer rewards offers—and 

as cardholders take greater advantage of the rewards that are offered. Since the first quarter of 

2015, data available to the Bureau show a roughly 84 percent increase in overall rewards 

expense incurred by issuers to support rewards programs. 

Balance transfers remain popular among consumers. Annual balance transfer volume rose 

roughly 38 percent from 2015 through the end of 2018, outpacing growth in balances and 

purchase volume. Meanwhile, the cost of balance transfers to consumers has been declining in 

recent years. Cash advance usage growth has significantly lagged behind growth in balances and 

purchase volume, with declines most notably in the below-prime market segment. The cost to 

consumers of cash advances has remained stable since the Bureau’s 2017 Report.

SCHOLARSHIP ON CARD ACT EFFECTS

This report also reviews recent academic research in the social sciences that has examined the 

CARD Act’s effects. In many cases, these academic analyses corroborate the Bureau’s findings 

from prior years’ card market reports including, for example, findings that the Act led to 

reductions in consumers’ total payments toward certain fees such as late fees and over-limit 

fees. However, across the methodologies and analyses reviewed in this section, a consistent 

theme is the challenge of disentangling the effects of the CARD Act itself, rather than the effects 

of other market changes such as the Great Recession.

Overall, the scholarship reviewed in this section suggests that the CARD Act’s effect on 

consumer welfare is mixed. The reviewed analyses examine, both theoretically and empirically, 

how the CARD Act may have had unintended consequences (but not necessarily unanticipated

ones) in parts of the market not explicitly regulated by the Act: for example, whether interest 
14 BUREAU OF CONSUMER FINANCIAL PROTECTION — CONSUMER CREDIT CARD MARKET REPORT

rates at account opening may have risen in response to the CARD Act’s restrictions on later 

repricing of interest rates on future outstanding balances. Academic research indicates that the 

direct and indirect consequences from the CARD Act may vary by consumer credit score, age, 

and other characteristics. The scholarship also highlights how these effects may depend on 

various features of the credit card market, such as market competitiveness and to what extent 

there is asymmetric information between different market participants.

DEBT COLLECTION

Issuers have lowered their daily limits on debt collection phone calls for delinquent credit card 

accounts since the Bureau’s last report. Average daily attempts remained well below these stated 

limits, which is consistent with findings from the 2017 Report. Most issuers now supplement 

their internal collections communication strategy with email and text messages, but these 

channels are used primarily for account servicing and not for delivering required collections 

notices. Issuers’ third-party collection networks typically do not use email and text. 

The volume of balances settled through for-profit DSCs grew faster than did issuers’ overall 

accounts receivable. Most issuers will not work with DSCs without receiving a signed or verbal 

authorization from the consumer. When engaging with DSCs, issuers generally apply the same 

settlement policies available to consumers who call the creditor directly to request settlements.

INNOVATION

Digital technology is being leveraged to offer consumers more tools to control how they shop for 

credit cards, how they qualify for different products, how they transact with physical cards or 

mobile phones, and how they pay for the associated debts. Some of these tools implicate a broad 

array of regulatory provisions that card issuers working in this space must navigate carefully. 

Technological advancements like machine learning and artificial intelligence incorporating new 

data sources are increasingly enabling the responsible expansion of credit availability to 

populations that lack a traditional credit score while also lowering the cost of credit to those 

with poor credit history. However, these same advancements may also bring new risks, such as 

unintended side effects and greater potential for discrimination, which companies must monitor 

closely.
15 BUREAU OF CONSUMER FINANCIAL PROTECTION — CONSUMER CREDIT CARD MARKET REPORT

1. Introduction

1.1 Review mandate

The Dodd-Frank Act which became law on July 21, 2010, established the Bureau. One year later, 

pursuant to that Act, authority and responsibility for implementing and enforcing the CARD Act 

were transferred from the Board to the Bureau. The CARD Act became law on May 22, 2009. Its 

stated purpose was to “establish fair and transparent practices related to the extension of credit” 

in the credit card marketplace.11

Among those responsibilities Congress originally assigned the Board was a mandate to “review, 

within the limits of its existing resources available for reporting purposes, [the] consumer credit 

card market [every two years].”12 In 2012, the Board and the Bureau agreed that responsibility 

 

11 Supra note 3, at 1. A full summary of the CARD Act rules implemented by the Board is at pages 11 through 13 of the

Bureau’s 2013 Report. See 2013 Report, supra note 5. The Bureau subsequently reissued these rules without 

material changes in December 2011. The Bureau later revised one CARD Act rule issued by the Board. On November 

7, 2012, the Bureau proposed selected revisions to the ability-to-pay rules, which were intended to address a 

number of unintended impacts of the prior rule on consumers who did not work outside the home. The final rule 

implementing this revision became effective on May 3, 2013, with an associated compliance deadline of November 

4, 2013. See 78 Fed. Reg. 25818 (May 3, 2013). On March 22, 2013, the Bureau finalized another revision to the 

CARD Act rules in response to a federal court ruling in 2012 that had granted a preliminary injunction to block a 

part of the Board’s 2011 rule from taking effect. The final rule became effective March 28, 2013. See 78 Fed. Reg. 

18795 (Mar. 28, 2013). See also Press Release, Bureau of Consumer Fin. Prot., CFPB Finalizes Credit CARD Act 

Rule (Mar. 22, 2013), https://www.consumerfinance.gov/about-us/newsroom/consumer-financial-protectionbureau-finalizes-credit-card-act-rule. 

12 15 U.S.C. § 1616(a) (2012).
16 BUREAU OF CONSUMER FINANCIAL PROTECTION — CONSUMER CREDIT CARD MARKET REPORT

for the review passed to the Bureau under the terms of the Dodd-Frank Act. This report 

represents the Bureau’s fourth mandated review of the consumer credit card market, following 

the Bureau’s reports on the market in 2013, 2015, and 2017.13

1.2 Report scope

This report fulfills Congress’ directive to review the consumer credit card market in two 

overlapping ways.

First, it responds to the general congressional mandate in section 502 of the CARD Act to review 

and report on the “consumer credit card market.” Second, it addresses “within the limits of [the 

Bureau’s] existing resources available for reporting purposes” topics explicitly enumerated by 

Congress for inclusion in this review, including: 

1. the terms of credit card agreements and the practices of credit card issuers;

2. the effectiveness of disclosure of terms, fees, and other expenses of credit card plans;

3. the adequacy of protections against unfair or deceptive acts or practices relating to credit 

card plans; and

4. whether or not, and to what extent, the implementation of this Act and the amendments 

made by this Act have affected: 

a. the cost and availability of credit, particularly with respect to non-prime borrowers;

b. the safety and soundness of credit card issuers;

c. the use of risk-based pricing; or

 

13 See generally, supra note 5. 
17 BUREAU OF CONSUMER FINANCIAL PROTECTION — CONSUMER CREDIT CARD MARKET REPORT

d. credit card product innovation.14

14 15 U.S.C. § 1616(a) (2012). While this report presents information which may be relevant to assessments of safety 

and soundness issues relating to credit card issuers, the Bureau does not produce any further analysis on this 

subject in this report. The prudential regulators (e.g., the Office of the Comptroller of the Currency, the Board of 

Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, and the National Credit 

Union Administration) have the primary responsibility for monitoring the safety and soundness of financial 

institutions. 

15 15 U.S.C. § 1616(b) (2012).

16 Request for Information Regarding Consumer Credit Card Market, 84 Fed. Reg. 647 (Jan. 31, 2019). 

17 No results in this report can be used to identify the outcomes or practices of individual entities. At the same time, 

outcomes and patterns observed in the market as a whole may not be true for (or may only apply in a limited degree 

to) any particular industry player.

The CARD Act also requires the Bureau to “solicit comment from consumers, credit card issuers, 

and other interested parties” in connection with its review.15 As in past years, the Bureau has 

done so through a Request for Information (RFI) published in the Federal Register, and the 

Bureau discusses specific evidence or arguments provided by commenters throughout the 

report.16

1.3 Methodology

This section reviews several aspects of the Bureau’s general methodology in compiling this 

report. Methodological approaches used in specific sections of this report are explained in more 

detail in those sections.

1.3.1 Data sources

This report leverages several data sources. It emphasizes sources already held by the Bureau, by 

other Federal regulators, and by industry stakeholders. All results reported from data 

throughout this report aggregate results from multiple industry participants.17

 
18 BUREAU OF CONSUMER FINANCIAL PROTECTION — CONSUMER CREDIT CARD MARKET REPORT

Sources include the following:

1. Data from the Bureau’s Consumer Credit Panel (CCP), which is a 1-in-48 longitudinal 

sample of de-identified credit records purchased from one of the three nationwide credit 

reporting agencies, which is representative of U.S. consumers with credit records. These data 

also inform other Bureau products, such as the Consumer Credit Trends reports.18 These 

data contain no personal identifiers, such as name, address, or Social Security number.

2. De-identified information that the Board collects as part of its “Y-14M” (Y-14) data 

collection. The Board collects these data monthly from bank holding companies that have 

total consolidated assets exceeding $50 billion.19 The Board shares with the Bureau data 

from Y-14 banks. The data received by the Bureau cover the period from the middle of 2012 

through the present, and accounted for just under 70 percent of outstanding balances on 

consumer credit cards as of year-end 2018.20

20 The Board has expanded the fields it collects from banks over time; therefore, some results reported below do not 

extend all the way back to 2012. Additionally, these data are periodically revised retroactively, and are therefore not 

fully static. These issuers represent a large portion of the market, but are not necessarily representative of the 

portion of the market not covered by the data the Bureau receives. A substantial number of consumer credit cards, 

cumulatively representing the remainder of the market as measured by outstanding balances, are outside the scope 

of the Y-14 data used by the Bureau because, among other reasons, they are issued by banks with assets of less than 

$50 billion, or are issued by non-banks, such as credit unions. Results reported from Y-14 data throughout this 

report should be interpreted accordingly.

Information in the Y-14 data do not include any personal identifiers. Additionally, accounts 

associated with the same consumer are not linked across issuers. The Y-14 does not include 

transaction-level data pertaining to consumer purchases. In addition, this study reports only

aggregate metrics, and reveals no information about any specific issuer.

 

18 See Bureau of Consumer Fin. Prot., Consumer Credit Trends, https://www.consumerfinance.gov/dataresearch/consumer-credit-trends/ (last visited July 15, 2019).

19 See Bd. of Govs. of the Fed. Reserve System, Report Forms FR Y-14M, 

https://www.federalreserve.gov/apps/reportforms/reportdetail.aspx?sOoYJ+5BzDYnbIw+U9pka3sMtCMopzoV

(last visited July 15, 2019) (for more information on the Y-14M collection). 
19 BUREAU OF CONSUMER FINANCIAL PROTECTION — CONSUMER CREDIT CARD MARKET REPORT

These data replace loan-level credit card collections that the Bureau previously collected.21

The Bureau no longer requires or oversees the collection of any loan-level credit card data on 

an ongoing basis. 

3. Information provided in response to a series of data requests made to several industry 

participants, comprised of two distinct sets:22

a. Data requested from a broad and diverse group of issuers to address a range of topics 

that neither CCP nor Y-14 data can address. This report refers to these data as Mass 

Market Issuer (MMI) data. These data cover application and approval volumes, rates, 

and channels, digital account servicing, and debt collection. 

b. Data requested from a diverse group of specialized issuers. These summary data, 

which focus on basic metrics of usage and cost, in places supplement the Y-14 to allow 

for a broader or more detailed perspective into certain facets of the market than either 

the Y-14 or CCP allow. Where these data supplement Y-14 data, those data are 

collectively called “Y-14+”.

4. The CFPB’s Credit Card Agreement Database, an online database available to the public at 

http://www.consumerfinance.gov/credit-cards/agreements, was created pursuant to the 

CARD Act. It contains most credit card agreements available to consumers as of quarter’s 

end for each quarter from the third quarter of 2011 to the fourth quarter of 2014, and from 

the first quarter of 2016 to present.23 After the fourth quarter of 2014, the Bureau 

temporarily suspended collection of agreements for one year to reduce burden while the 

 

21 See generally Bureau of Consumer Fin. Prot., Sources and Uses of Data, at 57-58 (Sept. 26, 2018), available at

https://www.consumerfinance.gov/data-research/research-reports/sources-and-uses-data-bureau-consumerfinancial-protection/. 

22 The Bureau notes that many players in the credit card industry are also entities with which the Bureau has one or 

more institutional relationships, such as a research partnership or membership on a Bureau-convened body.

23 Credit card issuers are not required to submit any credit card agreements to the Bureau if the card issuer has fewer 

than 10,000 open credit card accounts as of the last business day of the calendar quarter. 12 C.F.R. § 1026.58(c)(5).
20 BUREAU OF CONSUMER FINANCIAL PROTECTION — CONSUMER CREDIT CARD MARKET REPORT

Bureau developed a more streamlined and automated electronic submission system.24

Submission and publication resumed in the first quarter of 2016.

5. Responses to the RFI, which sought comment on all aspects of the review described in 

Section 1.2 above.25 The RFI generated 11 comments. That total includes six letters from 

trade associations representing credit card issuers and other market participants, two letters 

from individual issuers, one letter from an industry-side market participant, one letter from

a consumer advocacy group, and one letter from a consumer.

6. Credit card complaints that consumers have submitted to the Bureau’s Office of 

Consumer Response.

7. Commercially available data sources to which the Bureau subscribes that focus on the 

credit card industry, including mail volume monitoring reports, industry analyst reports, 

and data services and analytics from industry consultants. 

8. Numerous public sources, including but not limited to Securities and Exchange 

Commission (SEC) filings, analyst reports, studies and data produced by other regulators, 

academic scholarship, and the trade press.

9. Other information gathered informally through Bureau market monitoring activities.

1.3.2 Credit scores

Throughout this report, the Bureau refers to consumer credit scores. Lenders use these scores to 

predict a consumer’s relative likelihood of repaying a debt compared to other consumers. Credit 

scores provided by major national consumer reporting agencies are used by most credit card 

issuers to determine consumers’ eligibility for credit and to set pricing for credit lines.26

24 80 Fed. Reg. 21153 (Apr. 17, 2015); 12 C.F.R. § 1026.58(g).

25 82 Fed. Reg. 13313 (Mar. 10, 2017).

26 Section 8.3.1 discusses the increased reliance of some credit card lenders on data and/or scores other than those 

provided by the major national credit bureaus.

Data 

relied upon in this report include widely-used, commercially-available credit scores.

There are two important limitations to the way the Bureau uses credit scores in this report. 

Different credit score models, while fundamentally similar, may include or exclude different 

 
21 BUREAU OF CONSUMER FINANCIAL PROTECTION — CONSUMER CREDIT CARD MARKET REPORT

data points or weight them differently. This means, first, that data are aggregated on the basis of 

credit score even though not all consumer credit scores are computed using identical 

methodologies. Second, it means that, when reporting certain metrics over longer time horizons, 

the introduction of new models and changes in the prevalence of various models complicates 

comparisons between different points in time. In some cases, one or both of those two issues 

could affect which “credit score tier” applies to a certain account or consumer. (“Credit score 

tiers” used are defined further below.) The Bureau believes that different credit scoring 

methodologies, over the time periods and set of market participants examined in this report, are 

sufficiently consistent that it remains informative and useful to report aggregated results and 

changes over time by credit score. The Bureau nevertheless proceeds with caution when 

assigning precision, beyond a reasonable degree, to certain results.

When reporting results by credit score in this report, scores are grouped into five tiers. This fivetier grouping aligns with the groupings used in the Bureau’s 2017 Report on the credit card 

market and the Bureau’s Consumer Credit Trends reporting. Table 1 shows the distribution of 

adults, scored adults, and scored cardholders in each credit score tier.

TABLE 1: CREDIT SCORE RANGE SHARES AS OF Q4 2018 (CCP)

Credit score tiers U.S. adult 

population

U.S. scored 

population

U.S. scored credit 

cardholding 

population

Superprime 

(scores of 720 or greater) 42% 53% 62% 

Prime 

(scores from 660 to 719) 12% 16% 17% 

Near-prime 

(scores from 620 to 659) 6% 8% 8%

Subprime 

(scores from 580 to 619) 6% 7% 6% 

Deep subprime 

(scores of 579 or less) 13% 16% 7% 

Thin or stale score file 11% -% -%

Credit invisible27 11% -% -%

 

27 Kenneth P. Brevoort, Philipp Grimm, & Michelle Kambara, Data Point: Credit Invisibles, at 6, Office of Research, 

Bureau of Consumer Fin. Prot., (May 2015), http://files.consumerfinance.gov/f/201505_cfpb_data-point-creditinvisibles.pdf. 
22 BUREAU OF CONSUMER FINANCIAL PROTECTION — CONSUMER CREDIT CARD MARKET REPORT

Credit scores in the CCP and Y-14 are refreshed regularly. Unless noted otherwise, accounts and 

consumers are classified into score tiers based on their credit score at that time. As a result, 

when analyzing trends over time within a particular credit score tier, the set of accounts or 

consumers in a tier changes over time. This fact is especially important to note given that many 

consumers experience changes in their credit score that are large enough to move them from 

one credit tier to another.28

Credit scores have generally shifted upward in recent years. In fact, this shift has occurred even 

as the total scored population has been growing, making it even more striking that the absolute 

numbers of consumers with lower credit scores has been declining. Since the period from 2011 

through 2012, when both the absolute number and the share of consumers with below-prime

credit scores peaked, the number of consumers with lower scores has fallen by 8.5 million and 

the share has fallen by 7 percent. Nearly all of this change was in the deep subprime tier.29

 

28 See 2015 Report, supra note 5, at 53-55.

29 One commenter asserted that “credit scores are currently over-inflated.” See Randolph-Brooks Federal Credit 

Union Comment Letter, at 2-3. The basis for this assertion is that falling unemployment rates have contributed to 

this phenomenon because the relationship between unemployment and credit scores appears to have changed since 

the recession. The Bureau notes that many factors might contribute to increasing scores, including evolving scoring 

models, the adoption or use of alternative credit data, the removal of some recession-era derogatory marks, and the 

effect of certain CARD Act restrictions on younger and lower-income borrowers. The Bureau presents some findings 

on credit scores and scoring shifts in Section 4, effects of the CARD Act in Section 6, and innovations that may also 

be contributing to those changes in Section 8.3.1.
23 BUREAU OF CONSUMER FINANCIAL PROTECTION — CONSUMER CREDIT CARD MARKET REPORT

CONSUMERS WITH A CREDIT SCORE (CCP)

0M

20M

40M

60M

80M

100M

120M

Superprime Prime Near-prime Subprime Deep

subprime

Stale file Thin file

2015 2016 2017 2018 -- 2005-12 high & low

1.3.3 Other definitions

Throughout most of this report, the term “general purpose credit card” refers to credit cards that 

can transact over a network accepted by a wide variety of merchants, including the Visa, 

Mastercard, American Express, and Discover networks. The term “private label” refers to cards 

that can only be used at one merchant or a small group of related merchants.30 In some 

instances, mainly in certain parts of Sections 4 and 5, the term “retail” refers to a combined 

category of private label cards and some network-branded cards that are managed by a business 

unit that specializes in retail credit cards.31

There are many ways to take a snapshot of consumer credit card indebtedness. The Bureau 

relies on two of the most prevalent, using nominal figures unless otherwise indicated. The first 

one entails measuring the current amount owed by consumers on a specific date, regardless of 

where in any individual consumer’s billing cycle that date falls. Debt calculated in this manner is 

 

30 Private label cards generally transact over a private network maintained by the issuer to which the merchant is 

granted access. Some cards can transact over both a private label network and a general purpose network. For 

example, a consumer may be issued a card that features a merchant’s brand as well as a general purpose network 

brand. When used at the merchant, the transaction may be routed over the issuer’s private network, but at other 

merchants the transaction is routed over the general purpose network. For the purposes of this report, those cards 

are considered to be general purpose credit cards except where explicitly noted otherwise.

31 Retail cards do not include network-branded cards that carry hotel or airline branding, even if those cards are 

managed by a business unit that specializes in retail credit cards.
24 BUREAU OF CONSUMER FINANCIAL PROTECTION — CONSUMER CREDIT CARD MARKET REPORT

referred to as “outstandings.” For example, if one were to report the total amount owed by 

consumers on credit cards as of December 31, 2018, it would be referred to as outstandings.

The second method entails measuring the amount owed by consumers at the end of their billing 

cycles, regardless of whether those cycles fall on a certain date. The Bureau refers to debt 

calculated in this manner as “balances,” and in most cases as “cycle-ending balances.” For 

example, if one were to report the total amount owed by consumers at the end of their billing 

cycles that concluded in December 2018, it would be referred to as cycle-ending balances and, 

for some accounts, would calculate balances as of, e.g., the 10th of the month.

This report also uses the term “debt” to refer to both of these amounts interchangeably. Note 

also that consumer debt on credit cards (whether calculated as month-end outstandings or 

cycle-end balances) includes both “revolving” debt—the amount owed on accounts for which the 

balance was not paid in full by the immediately prior statement due date—and “transacting” 

debt—charges incurred on accounts for which the balance was paid in full by the immediately 

prior statement due date. While transacting accounts represent a large share of all credit card 

purchase volume, revolving accounts generally represent a large share of all credit card debt at 

any given point in time. More detail on revolving and transacting patterns is provided in the 

subsequent sections of this report.

Throughout this report, the Bureau refers to the “Great Recession,” which officially began in the 

final quarter of 2007 and ended in the second quarter of 2009. This report sometimes refers to 

it simply using the shorthand “the recession.” In many instances, these terms are used 

interchangeably, generally when attempting to compare or contrast trends or measurements 

taken in the period prior to the onset of the recession to more recent periods. Those references 

are generally used for convenience and should not be interpreted as a statement as to precisely 

when the recession began or concluded. 
25 BUREAU OF CONSUMER FINANCIAL PROTECTION — CONSUMER CREDIT CARD MARKET REPORT

1.3.4 Limitations

The limitations inherent to the Bureau’s methodology in this report are substantially similar to 

those inherent in the Bureau’s previous reports on the credit card market.32 Those limitations 

are restated here briefly.

First, while the Bureau would ideally like data and evidence that allows it to definitively identify 

the causes of certain outcomes, the data available generally do not allow it to do so. The Bureau 

cautions against interpreting factual observations in the study as definitively proving or 

disproving particular causal relationships. 

Second, each of the data sources the Bureau analyzes have particular limitations. Some sources 

are not a comprehensive view of the market; some are limited to the account level or the 

aggregate level; and some are purely qualitative. Not all data sources use consistent definitions 

or delineations or cover the same periods, products, or phenomena. To the extent possible, the 

Bureau mitigates these limitations. Every attempt is made to harmonize definitions and to 

identify those places where the Bureau is unable to do so.

 

32 See, in particular, the 2015 Report at page 27.
26 BUREAU OF CONSUMER FINANCIAL PROTECTION — CONSUMER CREDIT CARD MARKET REPORT

2. Use of credit

To provide a foundation for analyses in subsequent sections, this section reviews several market 

metrics that cover four aspects of the consumer credit card market. 

First, this section describes the overall size of the market. By some metrics, such as total credit 

card debt outstanding, the market has generally grown back to or even surpassed its prerecession size, at least in nominal terms.33

Second, this section looks at a number of basic metrics about consumer usage, including 

cardholding patterns, consumer-level and account-level balance and payment behavior, and 

persistent indebtedness. Some of these point to potentially significant differences between the 

credit card debt held by consumers prior to the recession and the debt they hold today.

Third, this section reports on delinquency and charge-off rates. These remain below historic 

norms but are worsening even as widely relied-upon macroeconomic indicators—like the 

unemployment rate—are not deteriorating.

Last, this section covers consumers’ increasing use of digital technology to, for example, review 

transactions and pay credit card bills. 

2.1 Market-level metrics

2.1.1 Total debt

Since the Bureau’s 2017 Report, consumer credit card debt has continued its steady growth. In 

nominal terms, by the end of 2018, it was approaching $900 billion, well above its pre-recession

 

33 In addition, as some commenters point out, “credit card debt as a share of disposable income has been relatively 

flat and remains...below pre-recession levels.” ABA Comment Letter, at 3.
27 BUREAU OF CONSUMER FINANCIAL PROTECTION — CONSUMER CREDIT CARD MARKET REPORT

peak of $792 billion. Adjusted for inflation, however, current debt is more comparable to 2006 

levels, as shown in Figure 1. 

AVERAGE CREDIT CARD BALANCES, NOMINAL AND INFLATION-ADJUSTED (CCP, BLS)34

34 This chart displays average cycle-ending balances calculated across each full year, which decreases the effect of 

seasonality. 

Considering just general purpose cards, in its last report the Bureau noted that balances had 

more-or-less steadily increased since the end of 2010 but had not yet returned to nominal prerecession levels. By the fourth quarter of 2018, however, total outstanding general purpose 

credit card debt stood at $793 billion, well above the $732 billion mark reached in the third 

quarter of 2008. This result has been driven by growth in debt, including transacting debt, held

by cardholders with superprime scores. General purpose card balances for consumers in every 

other tier remained below pre-recession highs, even in nominal terms, although consumers with 

prime scores were approaching those previous levels.

Private label credit card debt has also been growing rapidly in recent years. It reached $91 

billion in the fourth quarter of 2018, an increase of 20 percent since the start of 2015 and a 38 

percent increase since its pre-recession high in the fourth quarter of 2007. In marked contrast to 

general purpose balances, by the end of 2018, private balances held by consumers in every credit 

 

$600B

$700B

$800B

$900B

$1,000B

2006 2008 2010 2012 2014 2016 2018

CCP credit card balances (nominal) CCP credit card balances (real)
28 BUREAU OF CONSUMER FINANCIAL PROTECTION — CONSUMER CREDIT CARD MARKET REPORT

tier had attained pre-recession levels. Consumers with deep subprime scores were the last to 

cross this threshold in the fourth quarter of 2017.

2.1.2 Purchase volume

Purchase volume has continued to grow much faster than debt. Figure 2 shows the growth in 

annual purchase volume on general purpose cards compared to the change in debt levels, open 

accounts, and credit limits on these products, all indexed to 2005 levels.35 Purchase volume has 

taken off while balances and credit limits have only just surpassed their pre-recession peaks and 

account incidence is still below pre-recession levels.36 From 2015 through 2018, purchase 

volume grew 30 percent compared with growth of 20, 17, and 10 percent for balances, credit 

line, and account incidence respectively.

General purpose credit card purchase volume was $3.7 trillion in 2018, nearly double its prerecession high. Consumers with superprime credit scores accounted for 82 percent of this 2018 

spending, some 0.8 percentage points higher than in 2015. Consumers with prime scores 

accounted for 13 percent, some 0.6 percentage points lower than in 2015. The remaining tiers 

made up 5 percent, which was 0.15 percentage points lower than in 2015.

 

35 Figure 2 uses The Nilson Report data to show a perspective on purchase volume longer than Y-14 sources permit. 

Data on purchase volume are not included in the CCP.

36 General purpose balances and credit line are each up 0.3 percent on pre-recession levels. General purpose account 

incidence is 1.2 percent lower than its 2007 high. The Federal Reserve reports card payments “continued to show 

robust growth...” which may suggest an increase in tender share. Fed. Reserve Board, The Federal Reserve 

Payments Study: 2018 Annual Supplement, at 1 (Dec. 2018), available at

https://www.federalreserve.gov/paymentsystems/2018-December-The-Federal-Reserve-Payments-Study.htm.
29 BUREAU OF CONSUMER FINANCIAL PROTECTION — CONSUMER CREDIT CARD MARKET REPORT

INDEXED ANNUAL GROWTH OF CREDIT CARD CYCLE-ENDING BALANCES, PURCHASE

VOLUME, ACCOUNTS, AND CREDIT LIMITS, GENERAL PURPOSE (CCP, THE NILSON REPORT) 

Overall, this means that the long-running trend wherein cardholders increasingly make credit 

card purchases that they do not revolve (or do not revolve for long) has continued into the last 

few years. A recent The Nilson Report notes that “the percentage of total credit card debt subject 

to finance charges, the revolving debt component of outstanding receivables, has declined 

almost every year over the last two decades.”37 The Nilson Report further states that credit card 

debt as a percentage of purchase volume on U.S. general purpose cards has fallen from 64.7

percent in 1996 to 26.5 percent in 2018.38 

Private label cards show very different trends. Until recently, private label balances and 

purchase volume expanded roughly in tandem. Over the last few years, however, balances have 

grown more significantly than purchase volume. The discrepancy in growth rates peaked in 

2017, when balances reached 156 percent of their 2005 level and purchase volume actually fell to 

129 percent of their level in 2005. By the end of 2018, though, private label purchase volume 

was growing again, while balances had returned to 2016 levels. The value of total private label 

credit lines has continued to grow steadily over the last few years, surpassing pre-recession

levels for the first time in 2018. That run-up has been achieved even as the total number of open 

private label accounts in 2018 was similar to the total in 2010 and still well below its 2007 peak. 

 

37 The Nilson Report, No. 1145. Data available to the Bureau does not cover as broad a period, but confirms this trend 

for general purpose cards from 2015 through 2018.

38 Id.

75

100

125

150

175

200

225

250

2005 2007 2009 2011 2013 2015 2017

Cycle-ending balances Purchase volume Open accounts Credit limits
30 BUREAU OF CONSUMER FINANCIAL PROTECTION — CONSUMER CREDIT CARD MARKET REPORT

Spending on private label credit cards is also spread marginally more evenly across credit tiers, 

with consumers in the superprime and prime tiers together accounting for 84 percent of all 

private label spending in 2018. 

INDEXED ANNUAL GROWTH OF CREDIT CARD CYCLE-ENDING BALANCES, PURCHASE

VOLUME, ACCOUNTS, AND CREDIT LIMITS, PRIVATE LABEL (CCP, THE NILSON REPORT)39

2.2 Consumer use metrics

This subsection examines changes in a number of metrics of consumer use of credit cards. At the 

consumer level, this subsection reviews average credit card debt and cardholding.40 At the 

account level, it reviews revolving and payment rates. This section also introduces a new 

measure of the amount of time that balance is carried. In contrast to the market’s general return 

 

39 Purchase volume as reported here uses a different definition of private label cycle-ending balances than in the 

Bureau’s 2017 Report. The latter definition relied on store cards alone. The present report includes other private 

label products, such as medical, oil or gas company cards, and fleet private label cards.

40 Average purchase volume cannot be observed over this same period because the Bureau does not have purchase 

volume data in the CCP. The Bureau’s analysis of average credit line can be found in Section 4. 

50

75

100

125

150

2005 2007 2009 2011 2013 2015 2017

Cycle-ending balances Purchase volume Open accounts Credit limits
31 BUREAU OF CONSUMER FINANCIAL PROTECTION — CONSUMER CREDIT CARD MARKET REPORT

to pre-recession scale, these consumer use metrics reveal some notable differences between then 

and now.

2.2.1 Average debt

GENERAL PURPOSE

Figure 4 shows average general purpose credit card balances for consumers who held at least 

one such card with a balance. These were roughly $5,700 as of the end of 2018, which is the 

highest figure observed since the middle of 2009. Superprime cardholders show average 

balances in 2018 above their recession high of nearly $5,000, which was recorded in late 2008.41

Given that fewer than one in three cardholders with superprime scores revolve a balance on 

their credit cards, this likely represents less a shift in consumer indebtedness patterns than in 

purchase behavior, with credit cards potentially substituting for other payment instruments.42

 

41 In real terms, however, not even superprime consumers have reached average debt levels seen before the recession. 

Their 2008 level translates to $4,700 in 2018 dollars, 8 percent above their level in the fourth quarter of 2018.

42 See Figures 8 and 9 in Section 2.2.3. General purpose credit card transactions increased 10.8 percent by value yearover-year in 2017, compared to 7.0 percent growth for non-prepaid debit cards and 3.0 percent growth for prepaid 

cards. Further, based on available data the Federal Reserve observed that the number of check payments and cash 

withdrawals from ATMs continued to decline. Fed. Reserve Board, The Federal Reserve Payments Study – 2018 

Annual Supplement, (Dec. 20, 2018), available at https://www.federalreserve.gov/paymentsystems/2018-

December-The-Federal-Reserve-Payments-Study.htm. 
32 BUREAU OF CONSUMER FINANCIAL PROTECTION — CONSUMER CREDIT CARD MARKET REPORT

AVERAGE PER-CARDHOLDER YEAR-END CREDIT CARD BALANCES, GENERAL PURPOSE 

(CCP)43

General purpose card debt per cardholder has grown for all credit score tiers since 2015, 

although this measure remains below highs during the recession. Per-cardholder general 

purpose credit card debt has grown 11 percent since the beginning of 2015. In fact, consumers 

with deep subprime scores have seen average balances increase by 20 percent over this same 

time period. As discussed in more detail below, payment rates have increased much more slowly 

and rates of revolving in below-prime credit tiers are high. The growth in per-cardholder debt 

among cardholders with lower scores, therefore, represents an increase in revolving debt rather 

than a shift in purchase behavior.

Cardholders with prime credit scores consistently show significantly higher credit card balances 

on average than cardholders in any other credit score tier. Over the four quarters in 2018, 

general purpose balances for these consumers averaged over $8,000 per cardholder. Despite 

these high and increasing debt levels, these levels remain well below their peak values recorded 

in 2008, even in nominal terms. 

PRIVATE LABEL

Figure 5 similarly shows average per-cardholder balances for private label cardholders has 

grown for all tiers since 2016. Growth in average private label balances since 2011 has been 

 

43 Figures 4 and 5 show average per-cardholder balances for cardholders with a balance reported as of the last quarter 

of the year.

$0

$2,000

$4,000

$6,000

$8,000

$10,000

Superprime Prime Near-prime Subprime Deep

subprime

Overall

2015 2016 2017 2018 -- 2005-12 high & low
33 BUREAU OF CONSUMER FINANCIAL PROTECTION — CONSUMER CREDIT CARD MARKET REPORT

significant, with values in all of the credit tiers above their peak levels before or through the 

recession. Growth over the past three years has been more modest. Average per-cardholder 

private label balances were $1,507 as of the end of 2018, compared to $1,470 for the same 

quarter of 2016.

AVERAGE PER-CARDHOLDER YEAR-END CREDIT CARD BALANCES, PRIVATE LABEL (CCP)

2.2.2 Consumer cardholding

The Bureau estimates 66 percent of the 255 million adults in the United States had a credit card 

account in their name as of the end of 2018.44 Around 93 million consumers hold at least one 

general purpose and at least one private label card. Some 64 million hold only general purpose 

cards. Just under 10 million hold only private label cards. Private label cardholding was less 

common in 2018 than it was prior to the recession—in 2005, 51 percent of adults held at least 

one private label card, compared to 40 percent in 2018. For scored consumers, that trend holds 

for consumers in all credit score tiers. In contrast, general purpose cardholding is just as 

common today as it was prior to the recession, at 61 percent. 

 

44 A recent report from the Federal Reserve finds 81 percent of consumers report having at least one credit card. As 

noted above in this section, roughly 66 percent of consumers have one, though this does not include authorized 

users, who are individuals designated by the primary account holder to use the same credit account. At 12 million, 

authorized users would account for roughly an additional 5 percent of the adult population. See Fed. Reserve Board, 

Report on the Economic Well-Being of U.S. Households in 2018, at 27 (May 2019), 

https://www.federalreserve.gov/publications/files/2018-report-economic-well-being-us-households-201905.pdf.

$0

$500

$1,000

$1,500

$2,000

Superprime Prime Near-prime Subprime Deep subprime Overall

2015 2016 2017 2018 -- 2005-12 high & low
34 BUREAU OF CONSUMER FINANCIAL PROTECTION — CONSUMER CREDIT CARD MARKET REPORT

Figure 6 shows recent trends in the share of scored consumers, by credit tier, holding at least 

one open credit card account. Cardholding dropped significantly across every credit score tier

during (and for a year or two following) the recession. This metric has grown in recent years in 

the lower credit tiers, but it has not yet returned to pre-recession levels for cardholders in any 

credit tier.

SHARE OF CONSUMERS WITH SCORES AND AT LEAST ONE CREDIT CARD (CCP)

As Figure 7 reflects, this same increase is also evident in the average number of open accounts 

held. However, Figure 7 also shows that consumers in nearly every credit tier still hold fewer 

cards than they did before the recession. The difference is sharpest for consumers with 

superprime scores, who averaged well over five open accounts in each tier before the recession, 

but in 2018 were at or nearer four such accounts. Cardholders in below-superprime tiers, 

however, have shown positive year-over-year growth in every quarter since 2012 when they 

reached their lowest levels. Interestingly, the average number of open accounts held by prime 

cardholders has increased, even while the share of prime consumers with at least one credit card 

has decreased since 2015.

0%

20%

40%

60%

80%

100%

Superprime Prime Near-prime Subprime Deep subprime Overall

2015 2016 2017 2018 -- 2005-12 high & low
35 BUREAU OF CONSUMER FINANCIAL PROTECTION — CONSUMER CREDIT CARD MARKET REPORT

AVERAGE NUMBER OF OPEN CREDIT CARD ACCOUNTS HELD PER CARDHOLDER (CCP)

2.2.3 Revolving rates

Accounts with balances can be identified as exhibiting one of two basic patterns in any given 

cycle. “Transacting” accounts pay off the previous cycle’s balance in full before the end of the 

next cycle. “Revolving” accounts pay some amount less than that.45 Although an account can 

move back and forth between transacting and revolving, many accounts reveal persistent 

payment behavior over time.46

Figures 8 and 9 show the average share of accounts revolving a balance from one month to the 

next for general purpose and private label cards, broken down by cardholder credit score. There 

are no significant changes in revolving rates in any credit tier over the last few years. Revolving 

rates decrease as credit scores increase. For all credit score tiers, general purpose revolving rates 

continue to be higher than private label ones.

 

45 The methodology for determining an account is revolving has changed from when the Bureau reported on this in 

2017. In this report, an account is considered “revolving” in a cycle if its beginning balance is larger than the sum of 

payments received in a given cycle. If the sum of payments is equal to or exceeds a non-zero beginning balance, it is 

considered “transacting.” If an account does not satisfy either condition, for example if the beginning balance is 

zero, it is “neither transacting nor revolving.”

46 2015 Report, supra note 5, at 50-52 (citing Benjamin J. Keys & Jialan Wang, Minimum Payments and Debt 

Paydown in Consumer Credit Cards, (U. of Chicago Harris Sch. of Pub. Pol’y, Working Paper 2015), 

https://business.illinois.edu/finance/wp-content/uploads/sites/46/2015/01/Jialan-Wang-JMP.pdf. 

0

1

2

3

4

5

Superprime Prime Near-prime Subprime Deep subprime Overall

2015 2016 2017 2018 -- 2005-12 high & low
36 BUREAU OF CONSUMER FINANCIAL PROTECTION — CONSUMER CREDIT CARD MARKET REPORT

SHARE OF ACCOUNTS REVOLVING, GENERAL PURPOSE (Y-14+)47

SHARE OF ACCOUNTS REVOLVING, PRIVATE LABEL (Y-14+)

Although the Bureau cannot quantify the share of consumers who revolve—only the share of 

accounts that do so—recent Federal Reserve Board data sheds some light on the consumer 

experience in this respect. Among those with a credit card, about one-half report that they never 

carried an unpaid balance during the preceding 12 months, according to the latest survey on 

economic well-being of U.S. households conducted by the Board. The 2018 survey also found 

 

47 Figures that use Y-14 and Y-14+ data are based only on accounts that are “open and active” in a given month or 

cycle.

Superprime Prime Near-prime Subprime Deep subprime Overall

0%

30%

60%

90%

2015 2016 2017 2018

Superprime Prime Near-prime Subprime Deep subprime Overall

0%

30%

60%

90%

2015 2016 2017 2018
37 BUREAU OF CONSUMER FINANCIAL PROTECTION — CONSUMER CREDIT CARD MARKET REPORT

that 28 percent of those with a credit card reported paying only the minimum on their bill at 

least some of the time in 2017. The reported frequency of regular borrowing with credit cards 

during 2018 was similar to 2017, which was also similar to 2016.48

2.2.4 Payment rates

Payment rates provide an additional measure of consumer reliance on credit cards as a source of 

credit.49 The payment rate is the share of total cycle-beginning balances that are paid that 

cycle.50

General purpose card payment rates have continued their steady growth since the recession.51

As of the end of 2018, they exceeded 30 percent, with recent increases almost entirely driven by 

consumers with superprime scores. Superprime payment rates were 41 percent in 2015 and rose 

to 48 percent in 2018. This rise in payment rates occurred without a corresponding decline in 

revolving rates, indicating that consumers using general purpose cards as transaction devices 

are increasing purchase volume. That inference is further supported by Figure 2 in Section 2.1.2 

showing that purchase volume has grown at a significantly faster rate than balances since the 

recession. 

 

48 See Fed. Reserve Board, Report on the Economic Well-Being of U.S. Households in 2018, at 27 (May 2019), 

https://www.federalreserve.gov/publications/files/2018-report-economic-well-being-us-households-201905.pdf. 

See also Fed. Reserve Board, Report on the Economic Well-Being of U.S. Households in 2017, at 28 (May 2018), 

https://www.federalreserve.gov/publications/files/2017-report-economic-well-being-us-households-201805.pdf. 

49 Payment metrics cannot be shown at the consumer level because the CCP does not contain payment data. The Y-14 

is used instead for these views.

50 Thus, a payment rate of 100 percent corresponds to all account balances being paid in full, and a payment rate of 0 

percent indicates that no one is paying any credit card bill even in part.

51 See 2015 Report, supra note 5, at 49.
38 BUREAU OF CONSUMER FINANCIAL PROTECTION — CONSUMER CREDIT CARD MARKET REPORT

PAYMENT RATE, GENERAL PURPOSE (Y-14+)

Private label payment rates, by contrast, have fallen over recent years, further increasing the 

spread between general purpose and private label payment rates. Most of the discrepancy is a 

product of superprime consumer behavior, with superprime general purpose balances paid at a 

rate more than double that of superprime private label balances. One explanation for decreasing 

private label payment rates may be an increased prevalence of deferred interest promotions, 

which incentivize consumers to pay less than the full balance each month so long as the full 

promotional balance is repaid in full by the end of the promotional period.52

 

52 See 2017 Report, supra note 5, at 58 (finding that deferred interest promotional balances outstanding for 

consumers with superprime scores were equivalent to over half of private label balances owed by those same 

consumers).

Superprime Prime Near-prime Subprime Deep subprime Overall

0%

15%

30%

45%

2015 2016 2017 2018
39 BUREAU OF CONSUMER FINANCIAL PROTECTION — CONSUMER CREDIT CARD MARKET REPORT

PAYMENT RATE, PRIVATE LABEL (Y-14+)

2.3 Delinquency and charge-off

2.3.1 Delinquency

Since 2017, both general purpose and private label card delinquency rates have continued to 

increase.53 For general purpose cards, the delinquency rate—the share of accounts or balances 

on those accounts on which a consumer fails to pay the minimum payment by the due date—

remains close to or below pre-recession levels. For private label cards, the delinquency picture is 

more complex.

Before and through the recession, general purpose card accounts became delinquent much more 

often than private label card accounts. At the height of the recession, general purpose accounts 

became delinquent at more than twice the rate of private label accounts. In the wake of the 

recession, however, account delinquency rates for the two major types of cards have moved in 

near lockstep. General purpose account delinquencies in 2018 were close to their 1.5 percent

pre-recession average, whereas private label account delinquency rates in 2018 were higher than 

 

53 When a consumer fails to make a required minimum payment by the due date, the credit card account becomes 

“delinquent.” Because credit scores are heavily influenced by delinquency and charge-offs, these measures are not 

shown by credit score. 

Superprime Prime Near-prime Subprime Deep subprime Overall

0%

15%

30%

45%

2015 2016 2017 2018
40 BUREAU OF CONSUMER FINANCIAL PROTECTION — CONSUMER CREDIT CARD MARKET REPORT

they have been at any point during the recession. Figure 12 shows account delinquency rate 

trends.

SHARE OF ACCOUNTS 60 OR MORE DAYS DELINQUENT (CCP)54

One explanation for the convergence in account delinquency rates for general purpose and 

private label cards may be that private label card issuers are increasingly offering cards to 

consumers with lower credit scores. As discussed in Section 4, prior to 2008, the median credit 

score associated with new private label cards was about 20 points higher than for general 

purpose cards. From 2008 until mid-2013, median credit scores on both cards dovetailed. Since 

late 2013, however, new private label cards have had median credit scores about 10 points lower 

than new general purpose cards.55

Even as account delinquency rates have converged in the wake of the recession, delinquency 

rates as shares of balances show the opposite trend, as shown in Figure 13. By mid-2015, balance 

delinquency rates on general purpose cards declined to 1.5 percent from its recession peak of 6 

percent, while private label balance delinquency rates were around 3 percent. They have since 

 

54 Figures 12 and 13 use the delinquency definition “60 or more days delinquent,” meaning that the account is at least 

three minimum monthly payments behind on debt repayment. This is considered “severe” delinquency.

55 See Figures 15 and 16 in Section 2.3.2.

0%

0.5%

1.0%

1.5%

2.0%

2.5%

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

General purpose Private label
41 BUREAU OF CONSUMER FINANCIAL PROTECTION — CONSUMER CREDIT CARD MARKET REPORT

increased to 2 percent and 4 percent on general purpose and private label cards respectively. 

This discrepancy may be explained by different usage patterns between the two cards and 

changes in the credit profile of new accounts.56

SHARE OF BALANCES 60 OR MORE DAYS DELINQUENT (CCP)

The Bureau also looked at the share of consumers that fail to pay and become delinquent. The 

Bureau’s 2017 Report showed that the share of consumers with at least one severe delinquency 

on a card in the preceding year started falling around 2011 for both general purpose and private 

label cards.57 Since 2017, this share has increased marginally. By 2018, around 9 percent of 

general purpose cardholders and about 4.5 percent of private label cardholders had at least one 

severe delinquency in the preceding 12 months.

 

56 See Figures 15 and 16 in Section 2.3.2.

57 See 2017 Report, supra note 5, at 67.

0%

1%

2%

3%

4%

5%

6%

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

General purpose Private label
42 BUREAU OF CONSUMER FINANCIAL PROTECTION — CONSUMER CREDIT CARD MARKET REPORT

SHARE OF CONSUMERS WITH A CREDIT RECORD WHO HAVE AT LEAST ONE 60 OR MORE 

DAY DELINQUENCY ON A CREDIT CARD ACCOUNT IN THE PRECEDING YEAR (CCP)

2.3.2 Vintage delinquency

To better understand drivers of recent delinquency trends, it is helpful to review cumulative

trends in severe delinquency by means of a vintage analysis. With snapshot views of delinquency 

(like those shown in Section 2.3.1. above), it can be hard to tell what is driving changes in the 

delinquency rate—an influx of accounts with different risk profiles or a change in delinquencies

for accounts that have been open for some time. A vintage analysis can shed light on this by 

comparing the performance of accounts according to the time period (or “vintage”) in which 

they opened. It is therefore possible to observe how recently-issued card “vintages” are 

performing compared to vintages issued previously, including those from right before and after 

the recession. This vintage analysis can also control for the credit profile associated with an 

account at origination.58

For quarterly vintages of general purpose cards originated since 2015, between 4 and 6 percent 

of accounts had at least one severe delinquency within the first year after origination. (This is 

referred to as the “one-year cumulative delinquency” rate.) That is well within the historic range 

of 2.6 to 7.9 percent for the entire data period, which is shown in Figure 15. There is typically an 

inverse relationship between credit scores and delinquency; for example, the vintage with the 

 

58 Since delinquency has a strong negative impact on a consumer’s credit score, for this analysis cardholders are not 

grouped by their credit score at issuance.

0%

3%

6%

9%

12%

15%

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

General purpose Private label
43 BUREAU OF CONSUMER FINANCIAL PROTECTION — CONSUMER CREDIT CARD MARKET REPORT

highest delinquency is also the vintage with the lowest median credit score and dates to the 

second quarter of 2007. However, while recent vintages have delinquency rates on par with prerecession vintages, they also have higher median credit scores.

SHARE OF ACCOUNTS THAT HAVE HAD AT LEAST ONE 60-OR-MORE-DAY DELINQUENCY AT 

12 MONTHS SINCE ORIGINATION AND MEDIAN CREDIT SCORE AT ORIGINATION, BY VINTAGE,

GENERAL PURPOSE (CCP) 

In contrast, Figure 16 shows that one-year cumulative delinquency rates for recent private label 

vintages markedly exceed historic norms. Part of the explanation may be the looser 

underwriting standards used by private label card issuers as indicated by the lower median 

scores at origination for those vintages. As shown in Figure 16, the median credit score on new 

private label cards in recent years has hovered just below 700, roughly 3o points below that 

recorded during pre-recession periods.

680

690

700

710

720

730

740

750

0%

2%

4%

6%

8%

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Share of accounts delinquent (left) Median credit score at origination (right)
44 BUREAU OF CONSUMER FINANCIAL PROTECTION — CONSUMER CREDIT CARD MARKET REPORT

SHARE OF ACCOUNTS THAT HAVE HAD AT LEAST ONE 60-OR-MORE-DAY DELINQUENCY AT 

12 MONTHS SINCE ORIGINATION AND MEDIAN CREDIT SCORE AT ORIGINATION, BY VINTAGE,

PRIVATE LABEL (CCP)

Looking within credit score tiers, trends in delinquency rates by vintage are similar to the overall 

trends. As shown in Figure 17, near-prime account vintages since 2015 have experienced a 

delinquency trajectory more in-line with the worst-performing vintages of 2008 than with 

historical norms for that tier. Similarly, while at much lower delinquency rate levels, superprime 

account vintages from 2017 show higher cumulative delinquency numbers at 12 months than at 

any point between 2006 and 2014. 

SHARE OF NEAR-PRIME ACCOUNTS THAT HAVE HAD AT LEAST ONE 60-OR-MORE-DAY 

DELINQUENCY AT 12 MONTHS SINCE ORIGINATION, BY VINTAGE, PRIVATE LABEL (CCP)

680

690

700

710

720

730

740

750

0%

2%

4%

6%

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Share of accounts delinquent (left) Median credit score at origination (right)

0%

1%

2%

3%

4%

5%

6%

7%

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
45 BUREAU OF CONSUMER FINANCIAL PROTECTION — CONSUMER CREDIT CARD MARKET REPORT

2.3.3 Charge-off

Charged-off balances continue to show similar trends to balance delinquencies, as Figure 18

reflects.59 Both general purpose and private label charge-offs fell from high points during the 

recession to pre-recession levels or lower for most of the past five years. However, both markets 

have seen upticks in recent periods, recording their highest levels in several years. Forwardlooking statements made by several major issuers suggest issuers expect that charge-offs will 

moderate as economic indicators remain positive.60

 

59 Accounts that remain delinquent for 180 days must be “charged off,” meaning that the issuer can no longer 

consider the outstanding balance as an asset on its balance sheet. Delinquent accounts may have to be charged off 

prior to 180 days in certain circumstances as, for example, with a bankruptcy. See Off. of the Comptroller of the 

Currency, Policy Implementation – The Guidance Attached to this Bulletin Continues to Apply to Federal Savings 

Associations, OCC Bulletin 2000-20, (June 20, 2000), available at https://occ.gov/newsissuances/bulletins/2000/bulletin-2000-20.html. 

60 Issuers note losses are moderating and the economic environment remains positive. “From a sequential 

perspective, this was the sixth consecutive quarter of slowing year over- year increases in card charge-offs. This 

positive trend reflects the fact that normalization continues to moderate.” Discover Financial Services, Q1 2019 

Results – Earnings Call Transcript, (Apr. 25. 2019), available at https://seekingalpha.com/article/4256971-

discover-financial-services-dfs-ceo-roger-hochschild-q1-2019-results-earnings-call-transcript?part=single; “Our 

losses are still improving on a year-over-year basis” Capital One, Q1 2019 Results – Earnings Call Transcript, (Apr. 

25. 2019), available at https://seekingalpha.com/article/4256945-capital-one-financial-corporation-cof-ceorichard-fairbank-q1-2019-results-earnings-call?part=single;. “The outlook for credit as we see it remains 

positive...Economic indicators remain upbeat.” JPMorgan Chase & Co., Q4 2018 Results – Earnings Call 

Transcript, (Jan. 15, 2019), available at https://seekingalpha.com/article/4233603-jpmorgan-chase-and-co-jpmceo-jamie-dimon-q4-2018-results-earnings-call-transcript?part=single. 
46 BUREAU OF CONSUMER FINANCIAL PROTECTION — CONSUMER CREDIT CARD MARKET REPORT

ANNUALIZED RATE OF GROSS OUTSTANDING BALANCES CHARGED OFF (CCP)

Annualized charge-off rates for general purpose cards rose in 2017 and 2018, and by year-end 

2018 equaled 5.7 percent of balances. This represents a return to the 2005 to 2007 average 

charge-off rate of 6 percent, and remains well below charge-off rates observed during the 

recession, including the high of 16 percent in the first quarter of 2010. Private label charge-off 

rates follow a roughly similar pattern, but at a higher level. From 2017 to 2018, charge-off rates 

averaged 10.5 percent, roughly equal to the average observed from 2005 through 2007. 

Figure 19 shows the share of consumers who have experienced at least one charge-off in the last 

year was largely stable for both general purpose and private label cards before and during the 

recession. From 2010 through mid-2016, the share of general purpose cardholders experiencing 

a charge-off followed a downward trend, declining from about 8 percent in 2009 Q4 to 5.4 

percent in 2016 Q2. Since mid-2016, however, that share has begun to rise, likely owing to 

expanded credit access to consumers with lower credit scores. On the private label side, the 

share of consumers who have experienced a charge-off has hewed closely to about 3 percent

since 2006.

0%

3%

6%

9%

12%

15%

18%

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

General purpose Private label
47 BUREAU OF CONSUMER FINANCIAL PROTECTION — CONSUMER CREDIT CARD MARKET REPORT

SHARE OF CONSUMERS WITH A CREDIT RECORD WHO HAVE EXPERIENCED AT LEAST ONE 

CHARGE-OFF OF A CREDIT CARD ACCOUNT IN THE PRECEDING YEAR (CCP)

2.4 Usage of digital servicing 

As discussed elsewhere in this report, digital developments are changing many aspects of the 

credit card market.61 This is particularly true with respect to online and smartphone-based 

account servicing applications (mobile apps) for general purpose credit cards.62 This section

uses MMI data to examine how consumers use digital account servicing platforms—online 

account servicing portals (online portals) and mobile apps.

 

61 Credit card solicitations and applications through digital channels are discussed in Section 4.1.1. Other aspects of 

digital servicing are covered in Section 8.1.

62 Private label card accounts also utilize digital tools, but the experience is likely different, since many cardholders 

reach them through merchant websites or also use merchants’ digital tools for browsing or shopping rather than for 

strictly financial means. According to J.D. Power, credit card mobile app users report higher levels of satisfaction 

with their credit card accounts than do those who do not use mobile apps. See J.D. Power Satisfaction Study, supra

note 1, (reporting that “use of a credit card mobile app is associated with a 25-point increase in customer 

satisfaction, although just 39% of customers are currently utilizing credit card mobile apps...”).

0%

2%

4%

6%

8%

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

General purpose Private label
48 BUREAU OF CONSUMER FINANCIAL PROTECTION — CONSUMER CREDIT CARD MARKET REPORT

2.4.1 Enrollment and account information

Digital engagement is growing across all age groups and platform types. The share of people 

electing to receive statements digitally (e-statements) rather than by mail is continuing to 

increase significantly. Growth in mobile app use is especially pronounced, and those who use 

mobile apps use them a lot—J.D. Power finds 39 percent of customers use mobile banking apps, 

and Citigroup finds 31 percent of customers include a mobile banking app as one of their top 

three most-used apps.63 In recent years, several large bank issuers have publicly announced 

increases in investment into their digital servicing platforms.64

Figure 20 shows the share of active mass market credit card accounts enrolled in issuers’ online 

portals and/or mobile apps.65 As of 2018, 78 percent of active accounts are enrolled in online 

portals for general purpose cards, significantly higher than the 55 percent the Bureau reported 

as of 2014.66 That share is nearly 85 percent for active accounts held by consumers ages 25 to 64 

and over 87 percent for active account holders under age 25.

 

63 Id. Citigroup Inc.’s 2018 Mobile Payment Study reported that 31 percent of people listed mobile banking apps in 

their top three most-used apps, behind social media (55 percent) and weather (33 percent). See Press Release, 

Citigroup Inc., Mobile Banking one of the Top Three Most Used Apps by Americans, 2018 Citi Mobile Banking 

Study Reveals (Apr. 26, 2018), available at https://www.citigroup.com/citi/news/2018/180426a.htm. 

64 See, e.g., Citigroup Inc., Q4 2018 Results – Earnings Call Transcript, (Jan. 14, 2019), available at

https://seekingalpha.com/article/4233320-citigroup-inc-c-ceo-mike-corbat-q4-2018-results-earnings-calltranscript?part=single; Synchrony Financial, Q4 2018 Results – Earnings Call Transcript, (Jan. 23, 2019), 

available at https://seekingalpha.com/article/4235000-synchrony-financial-syf-ceo-margaret-keane-q4-2018-

results-earnings-call-transcript?part=single. 

65 A consumer may be enrolled in an online portal and may also have the mobile app. In fact, some issuers require 

online enrollment before mobile app use can be engaged.

66 2015 Report, supra note 5, at 133.
49 BUREAU OF CONSUMER FINANCIAL PROTECTION — CONSUMER CREDIT CARD MARKET REPORT

SHARE OF ACTIVE ACCOUNTS ENROLLED IN ONLINE PORTAL, MOBILE APPS, AND RECEIVING 

ONLY E-STATEMENTS, GENERAL PURPOSE (MMI)

Also noteworthy is the rise in the share of accounts enrolled in mobile apps, which has nearly 

doubled in only three years, from 29 percent in 2015 to 56 percent in 2018. Mobile app use is 

more common among younger consumers, but increases in use can be seen across all age 

groups. In 2018, over 90 percent of active accounts held by consumers under age 25 were 

enrolled in the issuer’s mobile app. For consumers between the ages of 25 and 64, and over 65,

mobile enrollment share was 63 percent and 26 percent, respectively. Overall, the Bureau 

expects the trend toward increasing mobile app usage to continue.

SHARE OF ACTIVE ACCOUNTS ENROLLED IN MOBILE APPS BY AGE, GENERAL PURPOSE 

(MMI)

The share of mass market accounts that do not receive paper statements from their issuer has 

risen by more than one-third over the last four years and in 2018 was nearly 50 percent. This 

means that paperless rates have risen faster over the last few years than digital engagement 

generally, with the result that the phenomenon of digitally engaged consumers choosing to 

Online Mobile E-statement

0%

20%

40%

60%

80%

2015 2016 2017 2018

Under 25 25 - 64 65+ Overall

0%

20%

40%

60%

80%

100%

2017 2018
50 BUREAU OF CONSUMER FINANCIAL PROTECTION — CONSUMER CREDIT CARD MARKET REPORT

continue to receive paper statements is becoming less common over time. There are indications 

that this change is closely related to the increase in mobile app use, particularly by younger 

consumers. Although younger consumers show higher rates of paperless engagement, 

consumers 40 and older self-report more significant benefit from transitioning to digital 

billing.67 The extent to which paperless cardholders review e-statements remains an open 

question.68 Consumer Action found 61 percent of the credit card consumers they surveyed 

online chose paper over digital delivery.69 Further, recipients of paper statements were more 

likely to report reviewing transactions than did those who receive bills electronically.70

2.4.2 Payment methods

The most common forms of digital servicing are reviewing transaction history and making 

payments.71 After entering deposit account information through their card issuer’s online portal 

or mobile app, consumers can generally authorize non-recurring “one-time” payments or 

recurring “automatic” payments. For a one-time payment, consumers can generally enter any 

payment amount and payment date they want. In some instances, there is a pre-selected default 

option presented, be it the full statement balance or the minimum payment. For automatic 

payments, all but one issuer respondent in the MMI survey allow cardholders to choose their full 

statement balance or their minimum payment amount. All issuers allow cardholders to choose a 

different, fixed payment amount rather than the full balance or minimum payment. Only one 

 

67 J.D. Power Satisfaction Study, supra note 1 (reporting that “although younger customers (under age 40) have been 

quicker to adopt digital billing, the effect of switching from paper to digital billing is most pronounced in the over40 population. Among customers 40 years old and older, satisfaction increases 23 points when customers switch 

from a traditional paper bill to digital billing. That differential is just 1 point in the under-40 population...”).

68 See 2015 Report, supra note 5, at 15.

69 Alegra Howard, Consumer Action survey: Given the choice, consumers prefer a paper trail, Consumer Action 

(Jan. 15, 2019), available at https://www.consumer-action.org/news/articles/paper-or-digital-winter-2018-2019. 

70 Id.

71 The information contained in this section does not include information outside of the servicing relationship with 

the issuer (e.g., payments sent to the card issuer from a third party at the consumer’s direction).
51 BUREAU OF CONSUMER FINANCIAL PROTECTION — CONSUMER CREDIT CARD MARKET REPORT

has a pre-selected default payment option, while the rest instead force the cardholder to write in 

an amount or select among a set of options.

SHARE OF ACTIVE ACCOUNTS ENROLLED IN AUTOMATIC PAYMENTS AT YEAR-END, 

GENERAL PURPOSE (MMI) 

As reflected in Figure 22, consumers have increasingly enrolled in automatic payments. In 2018, 

nearly 16 percent of active accounts within the scope of the MMI survey were enrolled in 

automatic payments at year-end, as compared to 11 percent in 2015.72 Automatic payment 

enrollment obviously eliminates late fee charges, but the Bureau has not attempted to quantify 

this impact or to determine whether non-recurring payments are also associated with lower late 

fee incidence rates.

 

72 Some studies have reported markedly higher consumer-reported rates of automatic payment. See, e.g., Mercator 

Advisory Group, U.S. Consumers and Credit: Rising Usage, at 38 (Dec. 2018), available at

https://www.mercatoradvisorygroup.com/Reports/Consumers-and-Credit--Rising-Usage/. It is possible that 

consumers who self-report overstate the extent of their use of automatic payment. Consumers may also be including 

pre-authorized one-time payments as automatic payments.

0%

5%

10%

15%

2015 2016 2017 2018
52 BUREAU OF CONSUMER FINANCIAL PROTECTION — CONSUMER CREDIT CARD MARKET REPORT

SHARE OF ACTIVE ACCOUNTS THAT MADE A PAYMENT IN THE LAST CYCLE OF THE YEAR BY 

PAYMENT METHOD, GENERAL PURPOSE (MMI)73

While non-automatic online payments remain the most popular, in 2018 automatic payments 

surpassed paper as the second-most-common payment method. Use of automatic payments has 

increased across consumers in all age groups. As shown in Figure 24, the age group with the 

highest share of accounts making an automatic payment (at 15 percent) are cardholders aged 25 

to 64. But other age groups show high rates as well, with consumers under age 25 about as likely 

to use automatic payments as those 65 years and older—roughly 12 percent for both groups.

 

73 Values do not sum to 100 percent as certain forms of payment, such as telephone and payments from a third-party, 

are not included.

Automatic Non-Automatic online Paper

0%

10%

20%

30%

40%

50%

60%

2017 2018
53 BUREAU OF CONSUMER FINANCIAL PROTECTION — CONSUMER CREDIT CARD MARKET REPORT

SHARE OF ACTIVE PAYMENT-MAKING ACCOUNTS THAT MADE AT LEAST ONE AUTOMATIC 

PAYMENT IN THE LAST CYCLE OF THE YEAR VIA ONLINE PORTAL OR MOBILE APP BY AGE, 

GENERAL PURPOSE (MMI)

Unlike automatic payments, online but non-automatic payment usage displayed significant 

differences across age groups. Younger consumers were significantly more likely than other age 

groups to use online portals or mobile apps for this kind of payment. This likely reflects the 

relative share of these consumers enrolled in online and mobile servicing platforms. However, 

as with automatic payments, all age groups saw increased usage of these one-time digital 

payments in 2018.

SHARE OF ACTIVE PAYMENT-MAKING ACCOUNTS THAT MADE AT LEAST ONE “ONE-TIME” 

ELECTRONIC PAYMENT IN THE LAST CYCLE OF THE YEAR VIA ONLINE PORTAL OR MOBILE 

APP BY AGE, GENERAL PURPOSE (MMI)

Paper-based payments remain a prominent payment method for older Americans, but that may 

be changing. In 2017, 31 percent of consumers 65 and older that made a payment in the final 

month of the year used a paper check at least once that cycle. In 2018, that figure had fallen to 

27 percent. Furthermore, the difference between age groups is stark—only 2 percent of 

Under 25 25 - 64 65+ Overall

0%

5%

10%

15%

2017 2018

Under 25 25 - 64 65+ Overall

0%

20%

40%

60%

80%

2017 2018
54 BUREAU OF CONSUMER FINANCIAL PROTECTION — CONSUMER CREDIT CARD MARKET REPORT

consumers under 25 and 7 percent of consumers between the ages of 25 and 64 used a paper 

check to pay their credit card bill in the last payment cycle of 2018.

SHARE OF ACTIVE PAYMENT-MAKING ACCOUNTS THAT MADE AT LEAST ONE PAPER 

PAYMENT IN THE LAST CYCLE OF THE YEAR BY AGE, GENERAL PURPOSE (MMI)

Under 25 25 - 64 65+ Overall

0%

10%

20%

30%

2017 2018
55 BUREAU OF CONSUMER FINANCIAL PROTECTION — CONSUMER CREDIT CARD MARKET REPORT

3. Cost of credit

As its predecessors did, this report assesses overall costs to credit card consumers using the 

Bureau’s total cost of credit (TCC) measure. TCC captures the totality of payments by consumers 

to issuers as an annualized percentage of cycle-ending balances on their accounts.74 This section

also looks separately at the main components of TCC—interest charges and fees.75 Cardholders 

revolving debt from one month to the next pay the majority of fees and interest. This analysis 

focuses primarily (but not exclusively) on costs to revolving cardholders.

3.1 Total cost of credit

TCC on revolving accounts has increased since the Bureau’s last report in 2017, driven largely by

increases in interest rates. As of the end of 2018, it stood at 18.7 percent. That remains lower 

than its highest mark during the recession. Split by card type, TCC for revolving accounts was 

17.8 percent and 23.2 percent in 2018 for general purpose and private label cards, respectively. 

For both general purpose and private label revolving accounts, Figures 1 and 2 show clearly that 

interest charges are the predominant share of consumer cost.

On the general purpose side, after remaining broadly stable over 2015 and 2016, TCC on 

revolving accounts increased in 2017 and 2018. Figure 1 shows the relevant trends. Even as TCC 

has been increasing, however, fee costs in every credit tier have been flat or declining. From 

2015 to 2018, the prime rate has increased a total of 2 percentage points, which helps to explain 

 

74 Cost data are from the Y-14, augmented by summary data that the Bureau collected from a range of issuers not 

included in that source. Y-14 data do not permit consumer-level cost reporting. For more detail on Y-14 data, see 

Section 1.3.1. Although this report uses broader cost data than previous iterations did, the Bureau does not claim 

that these data are representative of the market not covered by the data. TCC does not include the cash value of any 

rewards that may have been earned by the cardholder.

75 The TCC metric was initially introduced in the 2013 Report, and has since been used in the 2015 Report and 2017 

Report. See 2013 Report, supra note 5, at 19; 2015 Report, supra note 5, at 76; 2017 Report, supra note 5, at 72.
56 BUREAU OF CONSUMER FINANCIAL PROTECTION — CONSUMER CREDIT CARD MARKET REPORT

part of the 2.5 percent rise in TCC, because most consumer credit cards have variable rates that 

are tied to changes in the prime rate.76

TOTAL COST OF CREDIT, REVOLVING ACCOUNTS, GENERAL PURPOSE (SHADED AREA 

REPRESENTS FEES, SOLID AREA REPRESENTS INTEREST CHARGES) (Y-14+)

On the private label side, however, TCC on revolving accounts has declined over the last two 

years, both overall and for every credit tier. As with general purpose cards, fee costs on private 

label cards have also been roughly stable on net or declining between 2015 and 2018. These 

trends are shown in Figure 2. Despite some narrowing over the last few years, TCC remains 

consistently higher, both overall, and within every credit tier, on private label accounts, as 

compared to general purpose accounts. In 2015, the overall gap in TCC was 8.3 percentage 

points between the two card types. By 2018, this had fallen to 5.5 percentage points.

 

76 For further discussion of variable rates, see Section 3.2.2.

Superprime Prime Near-prime Subprime Deep subprime Overall

0%

10%

20%

30%

2015 2016 2017 2018
57 BUREAU OF CONSUMER FINANCIAL PROTECTION — CONSUMER CREDIT CARD MARKET REPORT

TOTAL COST OF CREDIT, REVOLVING ACCOUNTS, PRIVATE LABEL (SHADED AREA 

REPRESENTS FEES, SOLID AREA REPRESENTS INTEREST CHARGES) (Y-14+)

3.2 Interest charged

Interest charges have increased in the past few years. Both retail APRs and effective interest 

rates (EIR) on consumer credit cards have increased.77 In 2018 the average APR for general 

purpose and private label cards rose to 20.3 percent and 26.4 percent, respectively.78 As with 

TCC, the rise in interest charges is in large part the result of changes in prevailing market 

interest rates.79

 

77 For closed-end loan products, the APR captures certain fees as well as the interest rate. 15 U.S.C. § 1606(a)(1) 

(2012); 12 C.F.R. § 1026.22(b). However, for open-end credit, including credit cards, the APR is calculated using the 

periodic rate. 15 U.S.C. § 1637 (a)(4), (b)(5) (2012); 12 C.F.R. § 1026.2(a)(14), (21).

78 See Appendix A, Figures 1 & 2.

79 “Data from Form FR 2835a indicate that the average credit card interest rate across all accounts increased to a level 

of about 13 percent, while the two-year Treasury rate--a measure of the baseline, or "risk free," rate--rose to almost 

2 percent (figure 1), leaving the spreads unchanged.” Bd. of Govs. of the Fed. Reserve System, Report to the 

Congress on the Profitability of Credit Card Operations of Depository Institutions - July 2018, (July 2018), 

available at https://www.federalreserve.gov/publications/2018-july-profitability-credit-card-operations.htm. 

Superprime Prime Near-prime Subprime Deep subprime Overall

0%

10%

20%

30%

40%

2015 2016 2017 2018
58 BUREAU OF CONSUMER FINANCIAL PROTECTION — CONSUMER CREDIT CARD MARKET REPORT

3.2.1 Effective interest rates

While APR is a useful barometer of issuer pricing strategies, “effective interest rate” may provide 

a better measure of the cost of interest to cardholders because EIR incorporates the effect of 

short-term promotions and cash advances. An EIR is computed by annualizing the total of all 

interest charges consumers paid divided by those consumers’ cycle-ending balances.80 Figure 3 

shows that EIRs for general purpose cards with revolving balances have risen nearly 250 basis 

points from 13.2 percent in 2015 to 15.6 percent in 2018. Each credit tier experienced similar 

increases over time.

EFFECTIVE INTEREST RATE, REVOLVING ACCOUNTS, GENERAL PURPOSE (Y-14+)

Figure 4 shows that the picture for private label is different, with EIRs across the period staying 

mostly flat from 2015 to 2018. As the next subsection shows, this contrast is in part due to the 

fact that fewer private label cards are priced with a variable rate. 

 

80 EIRs differ from nominal rates for two reasons. First, consumers may have various balances on a single account 

(such as cash advances and balance transfers), not all of which are subject to the APR typically applied to purchases 

on that account. Second, consumers may have different patterns of payment and spending within a cycle. Due to the 

average daily balance method that most credit card issuers use to calculate interest charges, this means that two 

accounts subject to the same retail APR that conclude a cycle with identical balances may nevertheless properly be 

assessed different interest charges as a result of differences in the composition and fluctuation of those balances 

over the course of the cycle.

Superprime Prime Near-prime Subprime Deep subprime Overall

0%

5%

10%

15%

20%

2015 2016 2017 2018
59 BUREAU OF CONSUMER FINANCIAL PROTECTION — CONSUMER CREDIT CARD MARKET REPORT

EFFECTIVE INTEREST RATE, REVOLVING ACCOUNTS, PRIVATE LABEL (Y-14+)

3.2.2 Upward repricing

Credit card account APRs can change, both for new transactions and existing balances, subject 

to limitations imposed by the CARD Act.81,82 Perhaps most significantly, upward repricing on 

existing (and new) balances is allowed if a card’s rate is indexed to a market rate and that rate 

increases.83 Most general purpose cards are variable rate cards of this kind. As of the end of 

2018, more than 90 percent of general purpose accounts in the Y-14 were variable rate cards.84

In contrast, only about one-half of private label accounts in the Y-14 have variable rates.

 

81 The CARD Act did not prohibit all interest rate changes to existing accounts, but it limited the conditions under 

which issuers could reprice both new and existing balances and established new procedural steps for permitted rate 

increases. For more on CARD Act limits on repricing, see the 2013 Report at pages 11, 27-29. 

82 In response to the Bureau’s Request for Information a commentator claimed that CARD Act-imposed interest rate 

restrictions have limited repricing discretion and therefore limited the availability of credit card products for 

cardholders outside of the prime tier. It argues that these aspects of the CARD Act have limited issuers’ ability to 

accommodate borrowers falling outside of the prime category. See Bank Policy Institute (BPI) Comment Letter, at 2.

83 A card issuer is permitted to increase the APR on a variable rate card when the increase is due to an increase in an 

index that is outside the issuer’s control and available to the general public. 12 C.F.R. § 1026.55(b)(2). 

84 Issuers that use variable rate pricing mostly rely on The Wall Street Journal’s U.S. prime rate. A small percentage 

of the accounts, however, are linked to the London interbank offered rate (LIBOR). The status of LIBOR is in flux, 

Superprime Prime Near-prime Subprime Deep subprime Overall

0%

5%

10%

15%

20%

25%

2015 2016 2017 2018
60 BUREAU OF CONSUMER FINANCIAL PROTECTION — CONSUMER CREDIT CARD MARKET REPORT

As Figure 5 shows, upward APR repricing accelerated in 2017 and 2018, as variable rate 

increases were triggered in most quarters, and were subsequently reflected in changes to APRs 

for cardholders with variable rate cards.85 Over 90 percent of the upward repricing account 

events shown in Figure 5 are for increases of 25 basis points, which is the most common prime 

rate change over the last few years. As expected, given the higher share of cards that are indexed 

to a variable rate, general purpose cards show a much higher rate of upwards repricing across 

this period than private label accounts.

AVERAGE MONTHLY INCIDENCE OF UPWARDS APR REPRICING, ACTIVE ACCOUNTS (Y-14+)

These changes have significantly increased consumer costs. It is difficult to assess precisely how 

much consumer borrowing patterns may have been affected by increases in underlying interest 

rates. As a result, it is difficult to state with certainty the full actual impact of such increases on 

borrowers. The Bureau estimates that the six rate increases by the Federal Reserve from late-

 

which creates certain risks for cards linked to LIBOR. One commenter states they “expect LIBOR to be unreliable 

(and more volatile) by January 1, 2022 (or earlier).” BPI Comment Letter, at 7-8. The Bureau acknowledges this 

comment and is considering the issue further. 

85 See Appendix A at Figure 3 for a chart showing increases in the federal funds rate and the associated prime rate.

2015Q1 2016Q1 2017Q1 2018Q1

0%

10%

20%

30%

40%

General purpose Private label
61 BUREAU OF CONSUMER FINANCIAL PROTECTION — CONSUMER CREDIT CARD MARKET REPORT

2016 through late-2018 led to a cumulative increase of roughly $11 billion that credit card 

borrowers paid over that two-year period.86

3.3 Fees assessed

Collectively, fees represent just under one-fifth of total consumer costs and for consumers who 

exclusively transact, fees are the only source of cost. Fees take a variety of forms including 

annual fees, transactional fees (e.g., for cash advances), and penalty fees (such as late fees or 

over-limit fees). The CARD Act imposed several substantive pricing controls on both the 

amounts of penalty fees consumers could be charged and the conditions under which such fees 

could be imposed.87

3.3.1 Total fees

REVOLVING ACCOUNTS

Measured as a share of overall account balances, total fees on revolving accounts did not change 

materially over 2017 and 2018 on either general purpose or private label accounts. These trends 

are shown in Figures 6 and 7, which also show that, relative to balances, fees incurred on private 

label accounts that revolve are higher than on general purpose accounts that do so. For private 

 

86 Calculation uses historical quarterly balances multiplied by the cumulative changes in rates from 2016 to 2018. The 

increase on Dec. 20, 2018, was not included as it was not in effect for an entire quarter during the 2016 to 2018 

timeframe.

87 See, e.g., 15 U.S.C. §§ 1637(k), (n), 1665d (2012). CARD Act pricing restrictions have resulted in a substantial 

decline in overall fee costs to consumers since the pre-CARD Act period. See 2013 Report, supra note 5, at 34. 

CARD Act fee restrictions, of course, may have led to compensating changes in interest rates. For example, one 

commenter asserts that changes brought about by the CARD Act have resulted in higher interest rate margins “as 

issuers sought alternative ways to manage portfolio-wide risk.” See ABA Comment Letter, at 2. Section 6 contains a 

substantive review of economic scholarship on both the direct and unintended consequences of the CARD Act on 

interest rate and fee changes.
62 BUREAU OF CONSUMER FINANCIAL PROTECTION — CONSUMER CREDIT CARD MARKET REPORT

label accounts, fees comprised 5.8 percent of balances as of the end of 2018; on general purpose, 

they were 2.2 percent of balances.88 

Within certain credit tiers, however, the fee picture is changing. Figure 6 shows that general 

purpose accounts held by consumers with deep subprime credit scores saw fee-to-balance ratios 

fall in every year from 2015 through 2018. Even so, these tiers have fee ratios that are several 

multiples of those for accounts held by consumers with higher credit scores. Figure 7 shows feeto-balance ratios for private label accounts dropped in 2017 and 2018 for all credit score tiers 

except superprime. While the volume of fees has increased from 2015 to 2018, fee ratios have 

declined as a result of rising total balances. 

TOTAL FEES INCURRED IN THE YEAR AS A PERCENTAGE OF AVERAGE CYCLE-ENDING 

BALANCES, REVOLVING ACCOUNTS, GENERAL PURPOSE (Y-14+)

 

88 This is in part the product of lower average balances on private label accounts. (Section 2.2.1 contains data on 

average account balances for different card types, by credit tier.) The Bureau’s 2017 Report contains more 

information on this point. See 2017 Report, supra note 5, at 87-89.

Superprime Prime Near-prime Subprime Deep subprime Overall

0%

3%

6%

9%

12%

2015 2016 2017 2018
63 BUREAU OF CONSUMER FINANCIAL PROTECTION — CONSUMER CREDIT CARD MARKET REPORT

TOTAL FEES INCURRED IN THE YEAR AS A PERCENTAGE OF AVERAGE CYCLE-ENDING 

BALANCES, REVOLVING ACCOUNTS, PRIVATE LABEL (Y-14+)

TRANSACTING ACCOUNTS

For transacting accounts, this report calculates total fees as a share of purchase volume.89 On 

this cost measure (which has not been used in prior reports), there were no significant overall 

changes for general purpose or private label accounts from 2015 through 2018. Fee ratios for 

private label transacting accounts have increased in lower credit tiers, though it should be noted 

that very few accounts in these tiers transact. This appears to be the result of relatively slow 

growth in purchase volume for transacting accounts. Purchase volume by transacting 

cardholders has grown 44 percent on general purpose cards since 2015, but only 3 percent on 

private label card accounts.

3.3.2 Fee composition

Over the last few years, fee composition has changed relatively little. Figure 8 shows trends for 

general purpose cards over this period. The largest change is the increase in annual fees as a 

share of total fees. Annual fee trends are covered in more detail in the next subsection below. 

This increase comes largely at the expense of debt suspension fees, which continue to decline, 

 

89 For transacting accounts, cycle-ending balances are not as good a reflection of account use as purchase volume. 

Thus, this reports looks at fee costs for these accounts relative to purchase volume, not balances. 

Superprime Prime Near-prime Subprime Deep subprime Overall

0%

5%

10%

15%

2015 2016 2017 2018
64 BUREAU OF CONSUMER FINANCIAL PROTECTION — CONSUMER CREDIT CARD MARKET REPORT

even as the number and volume of annual fees have increased. Figure 8 also shows that a 

number of other fees remain prevalent on general purpose cards, including fees for balance 

transfers and cash advances.90

For private label cards, late fees make up the overwhelming majority of all fees assessed—90

percent in 2018. This represents a slight increase over the last four years, from 86 percent in 

2015, again in large part at the expense of debt suspension fees.

SHARE OF TOTAL FEES COSTS INCURRED BY TYPE OF FEE, GENERAL PURPOSE (Y-14+)

3.3.3 Annual fees

Annual fee volume has risen significantly over the last few years. For issuers in the data set, 

annual fee revenue totaled roughly $600 million in the first quarter of 2015. Annual fee revenue 

topped $1 billion in the first quarter of 2018.91 As discussed further below, this is a function of 

increases in the average annual fee for accounts charged a fee, but is also due to steady quarterly 

increases in the total number of accounts incurring an annual fee, even while the percentage of 

accounts with such fees has decreased.

 

90 For more information on cash advance and balance transfer trends, see Sections 5.2 and 5.3.

91 As used in this report, an “annual fee” refers to any general purpose participation or maintenance fee assessed to 

the consumer as a condition of holding the account, regardless of any pattern of usage.

Late fee Annual fee Balance

transfer fee

Cash advance

fee

Debt

suspension fee

Other fee

0%

10%

20%

30%

40%

50%

2015 2016 2017 2018
65 BUREAU OF CONSUMER FINANCIAL PROTECTION — CONSUMER CREDIT CARD MARKET REPORT

ANNUAL FEE VOLUME, GENERAL PURPOSE (Y-14+)

Annual fees have garnered significant attention in recent years with the introduction of new 

annual fee rewards cards marketed to lower-risk and affluent market segments.92 As shown in 

Figure 10, annual fees averaged roughly $80 per card with a fee in 2018, and that number has 

been increasing steadily for all credit score tiers. In particular, annual fee accounts held by 

superprime consumers averaged nearly $100 in annual fees in 2018, reflecting the increased 

prevalence in the past two years of richer rewards credit cards that carry higher annual fees. 

Revenue from these cards is typically returned to cardholders to varying degrees in the form of 

rewards. 93

 

92 See, e.g., Maria LaMagna, American Express Launches a New Credit Card for Jet-Setters – With new credit card 

for jet-setters – with a $450 Annual Fee, MarketWatch, (Apr. 17, 2018), available at

https://www.marketwatch.com/story/american-express-launches-a-new-credit-card-for-jet-setters-with-a-450-

annual-fee-2018-04-16. See also AnnaMaria Andriotis & Emily Glazer, Rewards Credit Cards Gained a Fanatic 

Following—Now Banks Are Pulling Back, Wall St. J. (Jan. 1, 2019), available at 

https://www.wsj.com/articles/rewards-credit-cards-gained-a-fanatic-followingnow-banks-are-pulling-back11546365926(“JPMorgan and Citigroup poached top executives from AmEx, which made premium rewards—with a

high annual fee—its calling card for decades, and copied the strategy.”).

93 For more on rewards, see Section 5.1.

2015Q1 2016Q1 2017Q1 2018Q1

$0B

$0.2B

$0.4B

$0.6B

$0.8B

$1.0B

$1.2B
66 BUREAU OF CONSUMER FINANCIAL PROTECTION — CONSUMER CREDIT CARD MARKET REPORT

Whereas cardholders with superprime scores typically pay an annual fee for rewards—with

higher annual fees generally funding richer rewards—cardholders in lower credit tiers may pay 

annual fees to offset credit risk or higher operating costs relative to revolving balances.94

AVERAGE ANNUAL FEE, GENERAL PURPOSE ACCOUNTS CHARGED AN ANNUAL FEE (Y-14)95

While average annual fees have been rising in all credit tiers, Figure 11 shows that annual fees

have actually become less common for accounts held by cardholders in every credit tier except 

superprime. One in four general purpose cards held by subprime and deep subprime 

cardholders carried an annual fee in 2018, compared to more than one in three in 2015.

Similarly, in 2018 roughly one in five near-prime cardholders carried an annual fee card, 

compared to one in four in 2015. In part, the reduction in annual fee prevalence for cardholders 

with below-prime scores was driven by an increase in the share of no-annual-fee card 

originations to consumers in these score tiers. Since 2016, however, most of that increase was 

due to originations of no-annual-fee secured cards which, while they do not charge a fee, still 

require some money be held as a deposit. 

 

94 See 2017 Report, supra note 5, at 91-92.

95 Average annual fee is calculated as the total number of months in each year and credit tier that an account with an 

observed annual fee is open times the annual fee observed for those accounts divided by the total number of account 

months in each year and credit tier that those annual fee-paying accounts are open.

Superprime Prime Near-prime Subprime and

deep subprime

Overall

$0

$20

$40

$60

$80

$100

2015 2016 2017 2018
67 BUREAU OF CONSUMER FINANCIAL PROTECTION — CONSUMER CREDIT CARD MARKET REPORT

ANNUAL FEE PREVALENCE, GENERAL PURPOSE (Y-14)96

3.3.4 Late fees

Since 2015, total late fee volume has increased, as shown in Figure 12. Issuers in the sample 

assessed nearly $13 billion in late fees in 2018, compared to less than $10 billion in 2015. As 

discussed further below, this increase in late fee revenue is in part a function of the increase in 

the total number of accounts and in part a function of increases in the per incidence fee; there 

does not appear to have been a change in the incidence of late fees on a per account basis. Figure 

13 shows that the share of card accounts held by consumers in each credit tier declines steeply 

with scores, but late fee volumes are relatively similar across these tiers. Superprime consumers 

hold 59 percent of card accounts but pay only 21 percent of late fee volumes; by contrast, 

consumers with deep subprime scores hold about 6 percent of card accounts but generate 24

percent of late fee volumes. 

 

96 Annual fee prevalence is calculated as the total number of months in each year that an account with an observed 

annual fee is open in a given credit tier divided by the total number of account months in each year that all accounts 

held by cardholders in that credit tier are open.

Superprime Prime Near-prime Subprime and

deep subprime

Overall

0%

10%

20%

30%

40%

2015 2016 2017 2018
68 BUREAU OF CONSUMER FINANCIAL PROTECTION — CONSUMER CREDIT CARD MARKET REPORT

LATE FEE VOLUME (Y-14+)

SHARE OF NUMBER OF ACCOUNTS AND SHARE OF LATE FEE VOLUME (Y-14+)

Issuers generally assess a late fee to consumers who do not make at least their minimum 

payment by the monthly due date. These and other “penalty” fees were targeted by specific 

CARD Act provisions, and the dollar amounts of such fees are now subject to CARD Act 

restrictions.97 In general, these fees have to be “reasonable and proportional.”98

97 15 U.S.C. § 1665d(a) (2012). For more on this, see Section 6.

98 Id.; 12 C.F.R. § 1026.52(b).

There is a 

 

2015Q1 2016Q1 2017Q1 2018Q1

$0B

$1B

$2B

$3B

$4B

Superprime Prime Near-prime Subprime Deep subprime

0%

20%

40%

60%

Share of accounts Share of late fee volume
69 BUREAU OF CONSUMER FINANCIAL PROTECTION — CONSUMER CREDIT CARD MARKET REPORT

regulatory “safe harbor” for specific fee amounts, which the Bureau adjusts for inflation 

annually.99 Initially, the safe harbor was set at $25 for an initial late fee and $35 for a second 

late fee within six billing cycles of a prior late fee. In 2019, the safe harbors are $28 and $39 

respectively.100

Since 2015, average late fees have increased slightly, from about $26 to $28 in 2018, as shown in 

Figure 14. They nevertheless remain substantially below their pre-CARD Act level of $33 in 

2008.101 Since 2014, the first year in which a change from the original penalty fee safe harbors 

came into effect, most large issuers have taken advantage of the increased safe harbors by 

increasing their fee amounts. However, issuers appear to vary in the speed and consistency with 

which they implement increases across their products and portfolios. Additionally, issuers may 

as a courtesy offer to reverse late fee charges if the cardholder has a history of paying on time, 

particularly for superprime cardholders. In combination with the two-tier safe harbor (one 

amount for the first instance, and a different amount for subsequent instances within one of the 

next six billing cycles), these practices make it challenging to assess what drives changes in 

average late fee amounts overall.

 

99 Regulation Z requires the Bureau to annually adjust the safe harbors to reflect changes in the Consumer Price 

Index. 12 C.F.R. § 1026.52(b)(1)(ii)(D). The Bureau has also introduced a tool to promote transparency in this 

calculation. Bureau of Consumer Fin. Prot., Office of Compliance & Guidance, Calculating Adjustments to the Safe 

Harbor Limits on Credit Card Issuer Fees, https://www.consumerfinance.gov/policy-compliance/guidance/truthlending-annual-threshold-adjustments/ (last visited July 15, 2019). The most recent safe harbor amounts went into 

effect in January 2019. 83 Fed. Reg. 43503 (Aug. 27, 2018).

100 12 C.F.R. § 1026.52(b)(1)(ii); Comment 52(b)(1)(ii)-2.i. 

101 See 2013 Report, supra note 5, at 23.
70 BUREAU OF CONSUMER FINANCIAL PROTECTION — CONSUMER CREDIT CARD MARKET REPORT

AVERAGE LATE FEE, NET OF REVERSALS (Y-14+)

To fill the picture out further, the Bureau analyzed the late fee terms of credit card agreements

from banks included in the Y-14+ panel. A review of agreements available in 2018 indicates that 

almost all products (83 percent) contracted to price at the penalty fee cap. Only 16 percent of 

filed agreements contracted to price, in whole or in part, below that cap. Another 1 percent

contracted not to charge late fees. None contracted to price above the safe harbor.

On average, consumers incur less than one late fee per year per general purpose account. This 

rate has remained steady since 2015. Accounts held by consumers in lower credit score tiers 

incur more late fees than those in higher tiers. For example, accounts held by consumers with 

deep subprime credit scores average more than three late fees a year. Accounts held by 

consumers with superprime or prime scores average less than one. Late fee incidence rates are 

higher for private label accounts, both overall and within every credit tier. For example, 

accounts held by consumers with deep subprime scores have an average of more than four late 

fees per year. But private label late fee incidence has also not changed materially over the last 

few years. 

3.3.5 Other fees

The quarterly volume of other fees issuers collect on credit cards has not changed significantly in 

recent years. This fee category includes fees for payments returned for insufficient funds (NSF 

fees) or exceeding the credit limit (over-limit fees); debt suspension fees; balance transfer fees; 

and cash advance fees, among others. The 2015 Report showed that these fees, considered 

Superprime Prime Near-prime Subprime Deep subprime Overall

$0

$10

$20

$30

2015 2016 2017 2018
71 BUREAU OF CONSUMER FINANCIAL PROTECTION — CONSUMER CREDIT CARD MARKET REPORT

collectively, have steadily declined in prevalence since 2008.102 Over-limit fees that were 

common prior to the implementation of the CARD Act remained almost nonexistent in 2017 and 

2018.103

 

102 2015 Report, supra note 5, at 71-72.

103 Section 3.3.5 of the 2017 Report notes that many issuers appear to have simply ceased assessing over-limit fees 

altogether, rather than maintain an opt-in regime. See 2017 Report, supra note 5, at 96-97.
72 BUREAU OF CONSUMER FINANCIAL PROTECTION — CONSUMER CREDIT CARD MARKET REPORT

4. Availability of credit

As in prior reports, this section examines a number of metrics relating to the availability of card 

credit. It explores two broad areas: first, new account origination; second, credit limits and line 

changes after origination.104 To do so, it tracks the credit card account life cycle. It starts with 

marketing and consumer applications across a range of channels. Next, it addresses issuer 

approvals as well as new account and line origination. Finally, this section ends with issuer line 

management of existing accounts.

4.1 New accounts

U.S. consumers submitted more than 165 million credit card applications in 2018, roughly onehalf million per day. Issuers primarily solicit consumer demand for credit cards through broadbased advertising like television commercials, and through targeted marketing, which is 

increasingly shifting away from direct mail towards digital channels. The analysis below 

examines patterns of credit card marketing and consumer shopping; consumer applications;

approval rates for new accounts; and the volume of new account and line origination. Where 

possible, the analysis reviews how these metrics vary by credit tier as well as by product and 

marketing channel.

4.1.1 Marketing and comparison shopping

As consumers spend more time on mobile and other internet-connected devices, issuers have 

adjusted their marketing and origination practices. The result is a digital ecosystem in which 

 

104 Issuers assign a credit line limit to each new account that determines how much a consumer generally is permitted 

to borrow on the account, at least initially. In subsequent periods issuers may adjust the credit line, as discussed in 

more detail in Section 4.2.3.
73 BUREAU OF CONSUMER FINANCIAL PROTECTION — CONSUMER CREDIT CARD MARKET REPORT

consumers encounter credit card marketing across digital platforms. In-person channels—like 

bank branches and retail locations—increasingly use digital technology. 

Credit card issuers continue to send mail directly to consumers, but the trend away from direct 

mail solicitation has continued since the Bureau’s last report. Issuers sent 341 million direct 

mail solicitations per month across 2017 and 2018, down 22 percent from 2016 levels. Monthly 

mail volume remains less than one-half of its pre-recession peak of 892 million pieces in 

2005.105 Pre-screened direct mail offers have declined even faster than direct mail generally. 

Their 2018 level was 20 percent below 2016 numbers. In 2018, the share of direct mail credit 

card solicitations that was pre-screened fell to 51.6 percent, its lowest mark since at least 2013, 

and down 3 percentage points since 2016.106

Card issuer spending on digital forms of marketing remains small compared to physical mail, 

but it has been growing significantly.107 Credit card advertising on social media sites, such as 

Twitter, Facebook, and Instagram, is becoming more prominent. Issuers increasingly buy digital 

advertising targeted to specific demographics and pay social media influencers to make and 

distribute content.108

Once a consumer is actively looking for a new credit card, third-party comparison sites (TPC 

sites) offer information intended to make it easier for consumers to compare credit cards.109

 

105 Data made available to the Bureau by Mintel Comperemedia.

106 Id.

107 Several of the largest credit card issuers report more than doubling their paid Facebook advertising for 

acquisitions from 2017 to 2018, based on data provided to the Bureau by Mintel. See also AnnaMaria Andriotis, 

Credit-Card Issuers Boost Spending on Social-Media Ads, Wall St. J. (Apr. 23, 2019), available at

https://www.wsj.com/articles/credit-card-issuers-boost-spending-on-social-media-ads-11556011801. 

108 Id.

109 In response to the Bureau’s Request for Information, a commentator responding on behalf of consumers argued 

that these websites vary in the independence of their advice. This commenter suggested that regulators can require 

conspicuous disclosure of arrangements between websites and card issuers. See National Consumer Law Center 

(NCLC) Comment Letter, at 12.
74 BUREAU OF CONSUMER FINANCIAL PROTECTION — CONSUMER CREDIT CARD MARKET REPORT

Some sites let consumers personalize the card offerings shown by using data provided by the 

consumer or third-party information authorized by the consumer. While that information helps 

personalize recommendations, some consumers may ultimately find their application does not 

get approved for a site-listed card for which they apply. To address this issue, one TPC site now 

offers to check if a consumer shopping for a specific card would be pre-qualified for that card 

based on internal underwriting criteria that certain credit card issuers have agreed to share with 

the site.110 TPC sites are not owned or operated by issuers, but many are funded primarily by 

issuer payments for sourcing new card accounts.111

4.1.2 Applications

To apply for a card, consumers submit an application through one of several channels, such as 

going online, using a mobile app, calling the issuer, or by walking into a bank branch or retail 

store to fill out a paper or digital application in-person. The issuer then decides whether or not 

to issue a credit card based on its internal underwriting process.112 Issuers may choose to loosen 

or tighten underwriting standards to be more or less approving of new card applications. The 

Federal Reserve Board’s quarterly Senior Loan Officer Survey shows that credit card 

underwriting standards have generally tightened over 2017 and 2018, after easing from 2012 

through 2016.113

 

110 Peter Rudegeair & AnnaMaria Andriotis, Lenders Share Their Underwriting Secrets with Credit Karma, Wall St. 

J. (Oct. 22, 2018), available at https://www.wsj.com/articles/lenders-share-their-underwriting-secrets-withcredit-karma-1540206000. 

111 For more on third-party comparison sites, see 2017 Report at page 265.

112 In addition to an issuer’s internal processes, issuers are required to consider an applicant’s ability to pay the 

minimum monthly payment on an account prior to opening a credit card account under an open-end (not homesecured) consumer credit plan or increasing a credit line on such an account. 12 C.F.R. § 1026.51(a)(1)(i) (2019).

113 Bd. of Govs. of the Fed. Reserve Board, Senior Loan Officer Opinion Survey on Bank Lending Practices (Feb. 4, 

2019), available at https://www.federalreserve.gov/data/sloos/sloos-201901-chart-data.htm. See also Bureau of 

Consumer Fin. Prot., Credit Tightness Index, https://www.consumerfinance.gov/data-research/consumer-credittrends/credit-cards/inquiry-activity/ (last visited June 13, 2019).
75 BUREAU OF CONSUMER FINANCIAL PROTECTION — CONSUMER CREDIT CARD MARKET REPORT

Figure 1 shows that general purpose application volume increased noticeably in 2016 for mass 

market issuers.114 Since then, however, applications from consumers in prime, near-prime, and 

subprime and deep subprime tiers have more or less returned to lower 2015 levels.115 Only 

application volume from consumers with no score remained higher than its 2016 level in 2018. 

APPLICATION VOLUME FOR MASS MARKET ISSUERS, GENERAL PURPOSE (MMI)

Retail cards show a similar pattern, with applications over 2017 and 2018 dropping from their 

2016 peak back to 2015 levels, as shown in Figure 2.116 A slight majority of credit card 

applications in 2018 were for retail accounts both overall and in every credit score tier. Only 

consumers with no score submitted more general purpose than retail applications.

 

114 “MMI” data is provided by a set of larger issuers that make up the substantial majority of the credit card market. 

Even so, these issuers may not be representative of other issuers.

115 MMI data account for a smaller share of the overall market as they reach deeper into the credit spectrum. 

Accordingly, we have combined approval rate data in the two lowest score tiers. 

116 Sections 4.1.2 and 4.1.3 divide the market into “general purpose” and “retail,” which is slightly different from the 

“general purpose” and “private label” categorization used elsewhere in the report. See Section 1.3 for more 

information on these differences.

Superprime Prime Near-prime Subprime and

deep subprime

No score

0M

5M

10M

15M

20M

2015 2016 2017 2018
76 BUREAU OF CONSUMER FINANCIAL PROTECTION — CONSUMER CREDIT CARD MARKET REPORT

APPLICATION VOLUME FOR MASS MARKET ISSUERS, RETAIL (MMI)

Applications can be submitted via a number of channels, though importantly there is some 

overlap (for example, a consumer may apply for a card digitally in response to a pre-screened 

offer received in the mail). In 2018, 78 percent of general purpose card applications were 

submitted digitally, with one-half of those coming via mobile device. In-person, mail, and prescreen accounted, respectively, for 11 percent, 7 percent, and 8 percent of 2018 general purpose 

applications. In stark contrast, 62 percent of 2018 retail card applications were submitted inperson, with digital channels accounting for another 36 percent. However, digital channel 

volume grew 17 percent year-over-year for retail applications, driven entirely by the increase in 

mobile channel application volume, which was up 39 percent. Over the same period, in-person 

retail applications actually fell 7 percent. 

DIGITAL APPLICATIONS

Digital channels account for roughly three-fourths of all applications. Although that share has 

not changed significantly over the last few years, Figure 3 reflects that the channel composition 

of digital applications has changed markedly over that period. Mintel reports that since 2014, 

mobile’s share of all applications has grown by 14 percentage points to 34 percent, while online 

applications submitted via desktop computer have declined 8 percentage points to account for 

28 percent of applications. Meanwhile, consumer use of tablets to apply for cards has stayed the 

same at around 10 percent of all applications. 

Superprime Prime Near-prime Subprime and

deep subprime

No score

0M

5M

10M

15M

20M

25M

2015 2016 2017 2018
77 BUREAU OF CONSUMER FINANCIAL PROTECTION — CONSUMER CREDIT CARD MARKET REPORT

APPLICATIONS SUBMITTED VIA DIGITAL DEVICES AS A SHARE OF APPLICATIONS (MINTEL)

MOBILE APPLICATIONS

For general purpose cards, the share of applications submitted via mobile devices has risen 

steadily in the last few years and in 2018 surpasses that of online applications. As shown in 

Figure 4, 43 percent of all general purpose mass market issuer applications are submitted by 

consumers using mobile devices, up from under 20 percent in 2015.117 That overall number 

conceals significant variation across credit tiers, as the mobile share of superprime applications 

is less than one-half of those for the lowest credit tiers. In fact, the majority of general purpose 

card applications by consumers with subprime and deep subprime scores now come from 

mobile devices. The most significant growth in mobile penetration was in 2017, especially for 

applicants with subprime and deep subprime scores and applicants with no credit score. That 

year coincided with an increased emphasis on mobile applications by several of the large bank 

issuers in the sample.118

 

117 Figures 4 through 13 rely on MMI data. The Bureau’s MMI survey grouped mobile phones and tablets as “mobile 

devices.”

118 For more information on digital servicing, see Section 2.4.

0%

10%

20%

30%

40%

2015 2016 2017 2018 2019

Mobile Desktop computer Tablet
78 BUREAU OF CONSUMER FINANCIAL PROTECTION — CONSUMER CREDIT CARD MARKET REPORT

APPLICATIONS SUBMITTED VIA MOBILE DEVICES AS A SHARE OF APPLICATIONS, GENERAL 

PURPOSE (MMI)

APPLICATIONS SUBMITTED VIA MOBILE DEVICES AS A SHARE OF APPLICATIONS, RETAIL 

(MMI)

For retail cards, the trend toward mobile channels has been as significant as it has for general 

purpose cards. However, growth in the share of retail mobile applications has been smoother 

and levels of mobile penetration remain lower than for general purpose cards. As with general 

purpose cards, growth in mobile penetration has been most significant for consumers in lower 

score tiers, though no tier has yet surpassed 50 percent of applications submitted via the mobile 

channel. The lower penetration for retail may reflect the continued importance of the point-ofSuperprime Prime Near-prime Subprime and

deep subprime

No score Overall

0%

20%

40%

60%

2015 2016 2017 2018

Superprime Prime Near-prime Subprime and

deep subprime

No score Overall

0%

10%

20%

30%

2015 2016 2017 2018
79 BUREAU OF CONSUMER FINANCIAL PROTECTION — CONSUMER CREDIT CARD MARKET REPORT

sale channel for retail cards and the fact that some retailers may not have card application 

functionality for their mobile app or offer a mobile app at all.119

TPC SITE APPLICATIONS

TPC sites continue to account for an increasing share of general purpose applications. Figure 6 

reflects that by 2018, more than one in four consumer applications for mass market general 

purpose cards were routed from TPC sites.120 Consumers with lower scores were more likely to 

apply via a TPC site than consumers with higher scores. One explanation may be that higher 

score consumers receive more card offers directly, whereas consumers with lower scores are 

forced to seek out credit when they need it. It is also possible that consumers with lower scores 

are more actively seeking, via TPC sites, information that would help them find a card for which 

they would have a better chance of approval. 

SHARE OF CREDIT CARD APPLICATIONS SUBMITTED VIA TPC SITES, GENERAL PURPOSE 

(MMI)

 

119 Some merchants do have apps that allow for card applications from within the app, but this remains relatively rare 

at this point. 

120 An additional number of consumers review TPC sites before applying directly with the issuer. Those applications 

are not reflected in the TPC data above.

Superprime Prime Near-prime Subprime and

deep subprime

No score Overall

0%

10%

20%

30%

2015 2016 2017 2018
80 BUREAU OF CONSUMER FINANCIAL PROTECTION — CONSUMER CREDIT CARD MARKET REPORT

4.1.3 Approvals

Since 2015, approval rates on general purpose cards have declined.121 As shown in Figure 7, this 

is true both overall and within every credit tier. For consumers with near-prime or higher credit 

scores, Figure 8 shows that approval rates are higher for retail cards than general purpose cards. 

For the lower credit tiers, however, general purpose applications have significantly higher 

approval rates. The same is true for applications from consumers without scores.

APPROVAL RATE, GENERAL PURPOSE (MMI)

For retail card applications submitted by consumers with superprime and prime scores, 

approval rates remained steady in 2017 and 2018. For consumers with superprime scores, for 

example, the approval rate for retail card applications was more than 90 percent, unchanged 

since 2015. For consumers with lower scores, however, retail approval rates declined slightly. 

Consumers with near-prime scores experienced the largest decline, dropping from 64 percent in 

2016 to 58 percent in 2018.122

 

121 This decline is consistent with the credit tightening reported by the Board. See infra footnote 113.

122 This was in part the result of select retail card issuers tightening credit terms in the wake of elevated credit losses. 

The Wall Street Journal reported in late 2017 on surprising increases in delinquency at three issuers, including two 

“specializing in store-branded, private label cards.” Aaron Beck, A Surprise Bump in Bad Card Loans, Wall St. J. 

(Sept. 20, 2017), available at https://www.wsj.com/articles/a-surprise-bump-in-bad-card-loans1505899800?mod=article_inline. 

Superprime Prime Near-prime Subprime and

deep subprime

No score Overall

0%

20%

40%

60%

80%

2015 2016 2017 2018
81 BUREAU OF CONSUMER FINANCIAL PROTECTION — CONSUMER CREDIT CARD MARKET REPORT

APPROVAL RATE, RETAIL (MMI)

As shown in Figures 9 and 10, approval rates vary substantially by application channel. For 

general purpose card applicants in the higher credit tiers, the highest approval rates are for 

applications based on pre-screened solicitations. Mail and in-person channels also have high 

approval rates in these higher tiers, perhaps due to the prevalence of pre-screen offers in these 

channels. In the lower score tiers, mail becomes the highest approval rate channel for general 

purpose cards, while pre-screen becomes the highest approval rate channel for retail cards.

Interestingly, TPC site approval rates are the second highest for consumers with the lowest 

scores; even for near-prime applications, they have the highest approval rates of any digital 

channel. Applications from consumers with no score fare best when submitted in person, 

perhaps because of the risk of synthetic fraud in other channels.123

 

123 Synthetic fraud is where someone illegally applies for a credit card using a “synthetic” identity constructed from 

pieces of legitimate consumer data, then uses that card to extract monetary value from credit card issuers. For more 

information, see Section 8.3.2.

Superprime Prime Near-prime Subprime and

deep subprime

No score Overall

0%

20%

40%

60%

80%

100%

2015 2016 2017 2018
82 BUREAU OF CONSUMER FINANCIAL PROTECTION — CONSUMER CREDIT CARD MARKET REPORT

APPROVAL RATE BY CHANNEL, GENERAL PURPOSE, 2018 (MMI)

APPROVAL RATE BY CHANNEL, RETAIL, 2018 (MMI)124

MOBILE APPROVALS

As discussed above, mobile applications grew significantly for both general purpose and retail 

cards across all credit score tiers between 2015 and 2018. Approval rate trends associated with 

those applications are less uniform. As a comparison of Figures 11 and 12 shows, mobile 

approval rates for general purpose card applications submitted by consumers with superprime, 

prime and near-prime scores all decreased from 2015 to 2018. In the lower credit tiers, they 

 

124 Retail card applications submitted in response to direct mail or pre-screened offers did not show sufficient volume 

to depict in this figure.

Superprime Prime Near-prime Subprime and

deep subprime

No score Overall

0%

20%

40%

60%

80%

100%

In person Mail Digital Mobile device TPC site Pre-screen All channels

Superprime Prime Near-prime Subprime and

deep subprime

No score Overall

0%

20%

40%

60%

80%

100%

In person Digital Mobile device All channels
83 BUREAU OF CONSUMER FINANCIAL PROTECTION — CONSUMER CREDIT CARD MARKET REPORT

were steadier, and consumers with no score even saw marginal increases in each year from 2015 

through 2018. On the retail side, by contrast, approval rates for applications submitted from a 

mobile device increased across this period for consumers in higher credit tiers and decreased for 

consumers in lower tiers. Overall, as Figures 9 and 10 reflect, mobile has the lowest approval 

rate of any channel for both card types, although it runs close to digital and sometimes TPC site 

approval rates for most credit tiers. Except in the subprime and deep subprime and no score 

tiers, mobile approval rates remain higher for retail than for general purpose card applications.

APPROVAL RATE FOR APPLICATIONS SUBMITTED VIA MOBILE DEVICES, GENERAL PURPOSE, 

2018 (MMI)

APPROVAL RATE FOR APPLICATIONS SUBMITTED VIA MOBILE DEVICES, RETAIL, 2018 (MMI)

TPC SITE APPROVALS 

Despite the relatively high level of TPC site channel approvals in lower tiers, the approval rate 

for TPC site channel approvals overall is 32 percent, which lags the general approval rate for all 

Superprime Prime Near-prime Subprime and

deep subprime

No score Overall

0%

20%

40%

60%

80%

2015 2016 2017 2018

Superprime Prime Near-prime Subprime and

deep subprime

No score Overall

0%

20%

40%

60%

80%

2015 2016 2017 2018
84 BUREAU OF CONSUMER FINANCIAL PROTECTION — CONSUMER CREDIT CARD MARKET REPORT

applications by about 10 percent. One possible explanation may be the credit-seeking nature of 

the consumers who visit those sites. If TPC site innovations help consumers align more closely 

with cards for which they will qualify the approval rates for this channel may increase. 

TPC sites directly facilitated more than 6 million mass market approvals in 2018, up 48 percent

since 2015. In 2015, TPC sites were responsible for one in every eight approved applications for 

general purpose cards, but by 2018 that reached one in five. That approval share growth was 

particularly strong for the subprime and deep subprime combined credit tier; TPC sites 

facilitated over 40 percent of approved applications in that tier in 2017 and 2018.

SHARE OF CREDIT CARD APPROVALS FACILITATED BY TPC SITES, GENERAL PURPOSE (MMI)

4.1.4 Account origination

In 2018, consumers opened roughly 106 million new credit card accounts.125 As Figure 14 shows, 

that is significantly lower for every credit tier than the highs seen before the recession. It is also 

somewhat lower than the post-recession high reached overall and by every credit tier in 2016. 

Only near-prime consumers have re-attained pre-recession levels of account origination, and 

then only in 2016. Originations remain well above levels seen during the recession for all credit 

 

125 The data source used in this subsection is the CCP, which offers a broader view of the market but does not allow 

the Bureau to identify all “retail” cards. As a result, this subsection uses “private label” as it does in other sections 

that reference the CCP. See Section 1.3 for more on the data sources used in this report.

Superprime Prime Near-prime Subprime and

deep subprime

No score Overall

0%

10%

20%

30%

40%

2015 2016 2017 2018
85 BUREAU OF CONSUMER FINANCIAL PROTECTION — CONSUMER CREDIT CARD MARKET REPORT

tiers, however, consumers with superprime scores have stayed closer to their recession-era low 

than consumers in any other tier.

ANNUAL NEW ACCOUNT VOLUME (CCP)126

General purpose origination trends are very similar. Figure 15 shows the same slight decline in 

account growth since 2016 highs and most tiers show origination levels well above levels seen 

during the recession. Superprime consumers have moved closer to their pre-recession high level 

of general purpose origination than they have for originations overall. Conversely, consumers in 

the lower credit tiers have stayed closer to their recession low levels of general purpose 

origination than they have for originations overall. Roughly 65 million general purpose cards 

were opened in 2018. About 30 million were issued to consumers with superprime credit scores, 

16 million to prime, eight million to near-prime, six million to subprime, and five million to 

consumers with deep subprime scores.

 

126 The CCP, the data source used in this subsection, consists of credit records. Because new accounts may be reported 

to NCRAs with some delay, the data may not immediately reflect new accounts. As a result, an estimate is used for 

the final months of 2018, as denoted by the legend entry “2018e” where appropriate.

0M

10M

20M

30M

40M

50M

60M

Superprime Prime Near-prime Subprime Deep subprime

2015 2016 2017 2018e -- 2005-12 high & low
86 BUREAU OF CONSUMER FINANCIAL PROTECTION — CONSUMER CREDIT CARD MARKET REPORT

ANNUAL NEW ACCOUNT VOLUME, GENERAL PURPOSE (CCP)

Private label origination trends are quite different from the trends for general purpose cards and 

overall for all but prime cardholders. Figure 16 shows that, in lower credit tiers, originations 

exceed pre-recession levels, despite some fall-off since 2016. Originations to consumers with 

superprime scores remain below their recession levels.

ANNUAL NEW ACCOUNT VOLUME, PRIVATE LABEL (CCP) 

Figure 17 shows that the overall share of consumers originating cards annually has declined 

since 2016. In 2018, 25 percent of consumers in the CCP originated a credit card, compared to 

27 percent in 2016. For superprime, this share is as low as recession levels. The share is highest 

for consumers with prime scores, followed by those with near-prime scores. Consumers with 

deep subprime scores originated at a substantially lower rate than other consumers with scores, 

but deep subprime is the only tier to see growth since 2016 in the share of consumers opening a 

new card in a given year. 

0M

5M

10M

15M

20M

25M

30M

35M

Superprime Prime Near-prime Subprime Deep subprime

2015 2016 2017 2018e -- 2005-12 high & low

0M

5M

10M

15M

20M

25M

30M

Superprime Prime Near-prime Subprime Deep subprime

2015 2016 2017 2018e -- 2005-12 high & low
87 BUREAU OF CONSUMER FINANCIAL PROTECTION — CONSUMER CREDIT CARD MARKET REPORT

ANNUAL SHARE OF CONSUMERS WITH A CREDIT RECORD ORIGINATING A CREDIT CARD 

(CCP)127

4.1.5 New account credit line

Total credit line on new accounts, both overall and within every credit tier, is down from its 2016 

high point.After five years of growth from its recession low in 2010, total new line neared $500 

billion in 2016, which was still below its 2007 high of $536 billion. It has since leveled off at 

roughly $475 billion in 2017 and 2018. Although all credit tiers have seen growth in new line 

since 2010, Figure 18 reflects that the total remains below pre-recession highs in all tiers. 

 

127 Methodology has been refined in this Report to better account for cardholders with a record but no score and 

become scored or cardholders that move between score tiers during the year. Results from the Bureau’s 2017 Report 

stated that the share of subprime consumers originating a card exceeded superprime from 2014 to 2016, in a 

reversal of historic trends. Under the new methodology, the Bureau notes no such reversal.

0%

10%

20%

30%

40%

Superprime Prime Near-prime Subprime Deep subprime Overall

2015 2016 2017 2018e -- 2005-12 high & low
88 BUREAU OF CONSUMER FINANCIAL PROTECTION — CONSUMER CREDIT CARD MARKET REPORT

ANNUAL INITIAL CREDIT LINE ORIGINATED (CCP)

GENERAL PURPOSE

New general purpose account line represented just under four-fifths of all new line in 2018. 

Unsurprisingly, therefore, it shows similar trends to overall new line, hitting a post-recession

high in 2016, then falling back marginally, both overall and across every credit tier. The majority 

of the growth in initial general purpose line since its low point during the recession has been in 

superprime accounts. Total new general purpose credit account line reached its highest level in 

2016, surpassing its pre-recession high, but has since slipped back below that level. So far, 

superprime is the only tier to reach pre-recession levels of new line. 

In overall terms, average credit line on new general purpose accounts has remained relatively 

steady over the last few years. That overall trend, however, masks a number of differences across 

credit tiers, as reflected in Figure 19. Consumers with subprime and deep subprime scores have 

seen average new line per general purpose account decline every year since 2015. The average 

new general purpose card issued to a deep subprime consumer had an initial line of $576 in 

2018, down 17 percent since 2015. Consumers with prime and superprime scores have 

experienced the opposite trend. Initial line for prime cardholders, for example, was $4,440 in 

2018, up 10 percent since 2015. Superprime consumers in 2018 had average initial general 

purpose lines above pre-recession levels. That has driven the overall average above prerecession levels as well. Deep subprime is the only other tier to have reached pre-recession levels 

of average new general purpose line, a result that has not been sustained over the last two years. 

$0B

$100B

$200B

$300B

$400B

Superprime Prime Near-prime Subprime Deep subprime

2015 2016 2017 2018e -- 2005-12 high & low
89 BUREAU OF CONSUMER FINANCIAL PROTECTION — CONSUMER CREDIT CARD MARKET REPORT

AVERAGE CREDIT LINE ON NEW ACCOUNTS, GENERAL PURPOSE (CCP)

PRIVATE LABEL

Once again, private label accounts show a different picture. Their highest annual level of new 

line came in 2005, well before the recession. Their post-recession high came in 2016, but at a 

level significantly below that 2005 high. That difference was mostly the result of a decline in 

aggregate line issued to superprime cardholders. The prime, near-prime, and subprime tiers 

recovered pre-recession levels of aggregate line relatively rapidly after the recession, and remain 

above their pre-recession levels even after some fall-off in total line levels since 2016.

As Figure 20 shows, average new line on private label cards has continued to increase slightly 

and reached $2,525 in 2018. This increase reflects compositional change because average line in 

each credit tier has been flat or declining since 2016. In contrast to general purpose line 

averages, overall average for new private label line remained below pre-recession levels. Average 

line has been above pre-recession levels in both the subprime and prime tiers in 2017 and 2018.

$0

$2,000

$4,000

$6,000

$8,000

$10,000

Superprime Prime Near-prime Subprime Deep

subprime

Overall

2015 2016 2017 2018e -- 2005-12 high & low
90 BUREAU OF CONSUMER FINANCIAL PROTECTION — CONSUMER CREDIT CARD MARKET REPORT

AVERAGE CREDIT LINE ON NEW ACCOUNTS, PRIVATE LABEL (CCP)

4.2 Existing accounts

Total credit line across all consumer credit cards surpassed $4 trillion in 2017 for the first time 

since the onset of the recession. In 2018, it reached $4.3 trillion, which was almost equal to its

pre-recession high. Despite this overall picture of increasing credit availability, most of that is 

accounted for by unused line on accounts held by consumers with superprime scores. There are 

indications that issuers are becoming more active in altering line allocations to control risk in 

lower credit tiers.128 The present subsection examines this issue in more detail by looking at a 

range of account-level and cardholder-level metrics on existing accounts for each score tier and 

card type.

4.2.1 Average credit line 

In 2018, after a series of steady increases, average general purpose credit line per account

exceeded its pre-recession high to reach more than $8,200. These increases were almost entirely 

driven by increases on superprime accounts. Despite recent growth across all tiers, no other 

credit tier has an average line exceeding its pre-recession level. In fact, other credit tiers 

recorded average line lows in 2014 and 2015, and have only recently exceeded the levels reached 

 

128 Unused line on superprime accounts totaled more than $3 trillion in 2018. Almost all of that was on general 

purpose cards.

$0

$1,000

$2,000

$3,000

$4,000

Superprime Prime Near-prime Subprime Deep subprime Overall

2015 2016 2017 2018e -- 2005-12 high & low
91 BUREAU OF CONSUMER FINANCIAL PROTECTION — CONSUMER CREDIT CARD MARKET REPORT

in the immediate aftermath of the recession. Average general purpose line per cardholder tells a 

broadly similar story of recent growth, but as Figure 21 shows, this metric remains below prerecession high levels, both overall and for every credit tier.

AVERAGE CREDIT LINE PER CARDHOLDER, GENERAL PURPOSE (CCP)

The private label picture is very different. At the account level, average line rebounded very 

quickly post-recession and as of 2018 significantly exceeds pre-recession levels both overall and 

for most credit tiers. The average private label card has one-third more line now than in 2008. 

Accounts held by consumers in lower credit tiers show slower growth over the same period, but 

no tier remains below its pre-recession high. At the cardholder level, growth has been more 

marked. Average private label line hit a post-recession low in 2011, but has since rebounded in 

every tier, and overall, by 59 percent or more.

4.2.2 Utilization

As average line per cardholder has increased, so has average unused line per cardholder. That is 

true for the market overall, as well as for general purpose and private label viewed separately. 

Superprime consumers account for almost all unused line. In 2018, the average cardholder with 

a superprime score had over $32,000 in credit line across both card types, but more than 

$0

$5,000

$10,000

$15,000

$20,000

$25,000

$30,000

Superprime Prime Near-prime Subprime Deep subprime Overall

2015 2016 2017 2018 -- 2005-12 high & low
92 BUREAU OF CONSUMER FINANCIAL PROTECTION — CONSUMER CREDIT CARD MARKET REPORT

$28,000 of that was unused.129 Average unused line is significantly lower for other credit tiers, 

as Figure 22 reflects, but has been increasing in recent years. Since 2015, average unused line 

per cardholder has risen between 8 percent and 12 percent for cardholders in score tiers below 

superprime. Even so, it remains significantly below pre-recession high levels in every credit tier, 

and in the lowest two tiers it remains relatively close to post-recession lows.

AVERAGE UNUSED CREDIT LINE PER CARDHOLDER (CCP)

Despite recent increases in average cardholder line and unused line, 2018 general purpose card

utilization still looks very different from pre-recession utilization. Figure 23 shows the 

distribution of general purpose card utilization rates for cardholders in each credit tier in 2007 

and in 2018. Utilization at the cardholder level is on the y-axis, and the share of cardholders in a 

given tier is shown on the x-axis. In every credit tier, utilization rates have increased. For 

example, median utilization was 47 percent for prime cardholders in 2018 but only 35 percent in 

2007. In fact, 2018’s near-prime utilization distribution is quite close to the distribution for 

subprime consumers in 2007. In terms of utilization alone, therefore, today’s near-prime 

cardholders look more like pre-recession subprime cardholders.

 

129 That low rate of usage is part of what contributes to a superprime score. The same balance held on lower line 

accounts issued to consumers with lower scores would result in a different utilization rate—and different credit 

score implications. 

$0

$5,000

$10,000

$15,000

$20,000

$25,000

$30,000

Superprime Prime Near-prime Subprime Deep subprime Overall

2015 2016 2017 2018 -- 2005-12 high & low
93 BUREAU OF CONSUMER FINANCIAL PROTECTION — CONSUMER CREDIT CARD MARKET REPORT

DISTRIBUTION OF UTILIZATION RATE BY CREDIT SCORE TIER IN 2007 (DASHED) AND 2018

(SOLID), GENERAL PURPOSE (CCP)

To explore utilization further, Figure 24 compares median general purpose cardholder 

utilization across all of their general purpose credit cards for the various credit tiers for 2007, 

2010, and 2018, and Figure 24 shows increases in median cardholder utilization across tiers 

over time, especially for consumers in lower tiers. Median utilization rates are noticeably higher 

in 2018 than in 2010, immediately following the recession for consumers in all credit tiers 

except prime.

MEDIAN CARDHOLDER UTILIZATION BY CREDIT SCORE TIER, GENERAL PURPOSE (CCP)

Figure 25 shows the share of consumers with 100 percent utilization across all general purpose 

credit cards for these same years. As shown, a higher proportion of cardholders were “maxed 

out” in the different credit tiers in 2018 than before or during the recession. About 42 percent of 

0%

20%

40%

60%

80%

100%

0 10 20 30 40 50 60 70 80 90 100

Superprime Prime Near-prime Subprime Deep subprime

0%

20%

40%

60%

80%

100%

Superprime Prime Near-prime Subprime Deep subprime

2007 2010 2018
94 BUREAU OF CONSUMER FINANCIAL PROTECTION — CONSUMER CREDIT CARD MARKET REPORT

deep subprime consumers have reached 100 percent utilization. Cardholders in this situation 

will find it difficult to make credit card transactions. 

SHARE OF CARDHOLDERS WITH 100 PERCENT UTILIZATION BY CREDIT SCORE TIER, 

GENERAL PURPOSE (CCP) 

Finally, Figure 26 tracks the share of consumers with below-prime scores that have used 90 

percent or more of their general purpose credit line. It shows a slight increase since 2016, 

reaching around 65 percent by the end of 2018. Even so, that remains below the levels in the 

wake of the recession. In fact, the share exceeded 70 percent from late 2009 through the end of 

2012. Before the recession, however, this metric fell to as low as 60 percent in 2006. Rising

balances suggest that the improvement in this metric from 2012 is the result of increases in 

credit line offered to cardholders with below-prime scores.

QUARTERLY SHARE OF BELOW-PRIME CARDHOLDERS WITH AT LEAST 90 PERCENT

UTILIZATION ACROSS ALL CARDS, GENERAL PURPOSE (CCP)

0%

10%

20%

30%

40%

Superprime Prime Near-prime Subprime Deep subprime

2007 2010 2018

50%

55%

60%

65%

70%

75%

2005 2007 2009 2011 2013 2015 2017 2019
95 BUREAU OF CONSUMER FINANCIAL PROTECTION — CONSUMER CREDIT CARD MARKET REPORT

4.2.3 Credit line changes

Credit lines on existing accounts are not static. Issuers can increase or decrease them without 

consumer consent. Credit line increases are somewhat restricted by the CARD Act’s ability-topay requirements, but issuers confront a range of more substantial regulatory restrictions on 

repricing existing balances.130 As a result, the Bureau’s 2017 Report reviewed evidence that 

suggested that issuers might be using line management, in place of repricing balances, as a 

means of responding to revealed risk post-origination.131 In that respect, the 2017 Report looked 

at metrics to assess whether issuers were extending smaller credit lines to borrowers at 

origination and then increasing those lines over time as borrowers demonstrated good payment 

behavior.132

As shown in Figure 27 and 28, quarterly CLI incidence in 2018 was around 4 percent for both 

card types. That is closer to a historic norm for private label but represents a significant drop 

from pre-recession levels for general purpose. CLDs spiked in the recession—very significantly 

for private label cards—but are now stable at under 1 percent for general purpose and around 2 

percent for private label.133

For both general purpose and private label, average quarterly CLI incidence remains relatively 

high for consumers with prime, near-prime, and subprime scores. Recent declines in CLI 

incidence for these tiers are notable for private label, in particular, although for general purpose 

cards near-prime and subprime tiers have also seen some fall-off since 2016. With those recent 

 

130 The ability-to-pay rules require that issuers consider an applicant’s ability to pay the minimum monthly payment 

on an account prior to opening a credit card account under an open-end (not home-secured) consumer credit plan 

or increasing a credit line on such an account. 12 C.F.R. § 1026.51(a)(1)(i). See also 15 U.S.C. § 1665e (2012). 

Repricing of existing balance is only allowed under a set of relatively narrow circumstances. See 12 C.F.R. § 

1026.55(b).

131 In response to the Bureau’s Request for Information, a commentator claimed that issuers have adopted a strategy 

of extending smaller initial credit lines which can rise over time as the borrower demonstrates good payment 

behavior. The comment noted that this practice allowed issuers to expand access to credit while managing risk. See

American Bankers Association (ABA) Comment Letter, at 4.

132 2017 Report, supra note 5, at 158-162.

133 See id. at 154.
96 BUREAU OF CONSUMER FINANCIAL PROTECTION — CONSUMER CREDIT CARD MARKET REPORT

changes, only subprime private label cardholders showed a CLI incidence that exceeds prerecession levels in 2018. 

AVERAGE QUARTERLY CREDIT LINE INCREASE INCIDENCE, GENERAL PURPOSE (CCP)

AVERAGE QUARTERLY CREDIT LINE INCREASE INCIDENCE, PRIVATE LABEL (CCP)

Recent trends in median credit line change amounts suggest that even as issuers may be using 

line changes more sparingly than in the pre-CARD Act era, the size of median CLIs have been 

increasing in recent years and in 2018 exceeded pre-recession highs overall and for the 

superprime tier. Figure 29 shows that for general purpose accounts, this increase resulted from 

greater median increases for cardholders with higher scores, although median CLIs for prime 

cardholders are now at $1,500, the same median size achieved before the recession. Consumers 

with lower scores actually saw a drop in median CLI over the last few years. In fact, in the 

lowest-score tiers, the median fell to the lows reached in 2010. This suggests general purpose 

0%

2%

4%

6%

8%

10%

Superprime Prime Near-prime Subprime Deep subprime Overall

2015 2016 2017 2018 -- 2005-12 high & low

0%

2%

4%

6%

8%

10%

Superprime Prime Near-prime Subprime Deep subprime Overall

2015 2016 2017 2018 -- 2005-12 high & low
97 BUREAU OF CONSUMER FINANCIAL PROTECTION — CONSUMER CREDIT CARD MARKET REPORT

card issuers may be reluctant to extend additional credit line to cardholders with lower scores in 

the current economic environment.

MEDIAN CREDIT LINE INCREASE AMOUNT, GENERAL PURPOSE (CCP)

Figure 30 shows median CLI amounts have increased for private label cards, despite the lower 

incidence of CLIs in this period. Again, this masks tier differences. Superprime consumers were 

the only tier to show any significant increase in median CLI between 2017 and 2018. Median CLI 

amounts remained flat or fell slightly in other tiers. In every tier, however, the median CLI 

amount remains at or above pre-recession highs. Along with higher lines on new private label 

accounts, larger CLIs have contributed to the strong rebound in credit availability for private 

label cardholders of all credit score tiers.134

 

134 See Section 4.2.1.

$0

$500

$1,000

$1,500

$2,000

$2,500

Superprime Prime Near-prime Subprime Deep subprime Overall

2015 2016 2017 2018 -- 2005-12 high & low
98 BUREAU OF CONSUMER FINANCIAL PROTECTION — CONSUMER CREDIT CARD MARKET REPORT

MEDIAN CREDIT LINE INCREASE AMOUNT, PRIVATE LABEL (CCP)

The CLD record is more uniform and stable, with the notable exception that CLD incidence has 

increased markedly for lower credit tiers in private label.135 By 2018, CLD incidence for deep 

subprime private label accounts was more than 9 percent, the highest level recorded since the 

2005 start of the data period used in this report, and significantly higher than the less than 2 

percent recorded for deep subprime general purpose accounts. Subprime private label accounts 

have also seen run-ups in CLD incidence in the last few years and in 2018 had an incidence rate 

of around 5 percent, as compared to less than 2 percent for general purpose accounts. Similarly, 

CLI incidence for private label accounts has fallen for cardholders in all tiers, but particularly for 

cardholders in below-superprime tiers. This evidence suggests that private label card issuers 

may be reacting to heightened risk in those portfolios by limiting their exposure.

 

135 Graphical depictions of CLD trends by tier are in Appendix A at Figures 4 through 7.

$0

$200

$400

$600

$800

$1,000

Superprime Prime Near-prime Subprime Deep subprime Overall

2015 2016 2017 2018 -- 2005-12 high & low
99 BUREAU OF CONSUMER FINANCIAL PROTECTION — CONSUMER CREDIT CARD MARKET REPORT

5. Practices of credit card 

issuers

This section describes trends and developments in issuer practices related to three common 

credit card features: credit card rewards, balance transfers, and cash advances. For each feature, 

it discusses its take-up or prevalence in the market, costs associated with providing or utilizing 

the feature, and any changes issuers or third parties have made in provisioning or supporting 

consumers who choose to use them.

5.1 Rewards

Credit cards offering points, miles, cash back, or exclusive experiences remain popular with 

cardholders. This section reviews recent rewards trends.

5.1.1 Prevalence

The share of credit card spending accounted for by rewards cards has continued to increase over 

the last few years. That is true both overall and for each of the main credit tiers, with growth 

particularly notable for consumers with lower credit scores. By the end of 2018, even consumers 

with deep subprime scores put more than one-half of their credit card purchase volume on 

rewards cards, and consumers with near-prime scores put more than two-thirds of their 

spending on rewards cards.136 Trends in reward-card purchase volume as a share of total 

spending are shown in Figure 1. 

 

136 In an interesting survey result, J.D. Power reported in 2018 that consumers who self-report as “fully 

understanding how to earn and redeem points” have an average spend that is nearly one-third higher than the 

average spend of consumers who self-report as not fully understanding their rewards programs. See J.D. Power

Satisfaction Study, supra note 1 (reporting that overall about 64 percent of credit cardholders say that they fully 

understand the rewards available to them). 
100 BUREAU OF CONSUMER FINANCIAL PROTECTION — CONSUMER CREDIT CARD MARKET REPORT

While rewards cards continue to account for a larger share of spending, their share of 

originations is falling. Figure 2 shows the share of originations accounted for by rewards cards 

over the last few years. For all credit score tiers and overall, that share declined in 2018. In fact, 

by the end of 2018, rewards originations for every credit tier were below their share of total 

originations at the end of 2015, in some cases quite markedly so. As explored in the next 

subsection, the popularity of rewards and other factors have driven rewards costs higher. The 

resulting cost pressure, rather than any loss of demand, may account for the results in Figure 2. 

SHARE OF PURCHASE VOLUME ON A REWARDS CARD, GENERAL PURPOSE (Y-14+)

SHARE OF NEW ACCOUNTS WITH REWARDS, GENERAL PURPOSE (Y-14)

Given the predominance of cards at the higher end of the credit spectrum, rewards cards still 

account for over 60 percent of all originations. That result roughly aligns with survey findings 

Superprime Prime Near-prime Subprime Deep subprime Overall

0%

20%

40%

60%

80%

100%

2015 2016 2017 2018

Superprime Prime Near-prime Subprime and

deep subprime

No score Overall

0%

20%

40%

60%

80%

2015 2016 2017 2018
101 BUREAU OF CONSUMER FINANCIAL PROTECTION — CONSUMER CREDIT CARD MARKET REPORT

that show rewards as the predominant factor in choosing a card.137 Despite a relatively low share 

of new accounts with rewards for general purpose cardholders with subprime and deep 

subprime scores, these cardholders still put more than one-half of their credit card spending on 

rewards cards, as shown in Figure 1.

Cardholders continue to prefer cash rewards, despite the sometimes-higher redemption value of 

other types of rewards like points or miles, possibly due to the simplicity and flexibility of cash 

rewards programs.138 More than one-quarter of all originations in the Y-14 sample for 2018 were 

for cashback rewards cards. Although the share of originations accounted for by these cards has 

declined slightly over the last few years, no other rewards category accounted for a larger share 

of originations. Cards that earned miles continued to account for less than 10 percent of all 

originations in 2018.

5.1.2 Cost

The cost of offering rewards has risen over the past several years as issuers compete for 

cardholders with richer rewards offers—and cardholders take greater advantage of the rewards 

that are offered. Since the first quarter of 2015, the data available to the Bureau show a roughly 

84 percent increase in overall rewards expense.139 Given the increase in the overall number of 

 

137 One recent survey reported that “[r]ewards continue to be the number one factor for why consumers use one credit 

card over another. This was true again this year, with 79 percent claiming it influenced their choice...” TSYS, 2018 

TSYS U.S. Consumer Payment Study, at 23 (Apr. 2019), http://tsys.com/Assets/TSYS/downloads/rs_2018-usconsumer-payment-study.pdf. Similarly, J.D. Power’s 2018 survey found that 47 percent of credit card customers 

who switched to a new card within the past 12 months did so for a better rewards program. See J.D. Power

Satisfaction Study, supra note 1. In its 2013 Report, the Bureau references a 2011 Mercator Customer Monitor 

Survey showing rewards were the number one reason to apply for a selected card at that time as well. 2013 Report, 

supra note 5, at 82 n.94.

138 See Claire Tsosie, Cash Back vs. Travel: How to Choose Credit Card Rewards, Nerdwallet: Blog (Nov. 3, 2017), 

available at https://www.nerdwallet.com/blog/credit-cards/cash-back-vs-travel-how-to-choose-your-credit-cardrewards/. 

139 “Rewards expense” refers to “Total Non-Interest Expense – Rewards/Rebates Expense,” defined as 

“rewards/rebates expenses associated with reward and rebate programs for credit cards.” Fed. Reserve System, 
102 BUREAU OF CONSUMER FINANCIAL PROTECTION — CONSUMER CREDIT CARD MARKET REPORT

rewards accounts across the same period, the average rewards expense per account has not risen 

as fast, but it has still seen significant increase. In 2018, each rewards card cost issuers an 

average of $167 in rewards-related expense, up from $139 in 2015. This increase has been 

driven, in part, by an increased prevalence of high-cost high-rewards cards—with high sign-on 

bonuses—in the affluent market segment.140 Intense rewards cards competition has pushed up 

not only expenses but issuers’ reserved liabilities for rewards benefits accrued but not redeemed 

by cardholders.141

AVERAGE ISSUER REWARDS EXPENSE PER REWARDS ACCOUNT PER YEAR, GENERAL 

PURPOSE (Y-14,Y-14P)

One way issuers have sought to reduce costs on rewards products is by reducing the redemption 

value, placing restrictions on rewards earning, or eliminating ancillary benefits. Issuers have 

also sought to restructure rewards programs in ways that may reduce the value of the cards to 

some users, such as lowering sign-on bonuses or limiting eligibility for bonuses to some 

 

Instructions for the Capital Assessments and Stress Testing Information Collection, at 201-02, 

https://www.federalreserve.gov/reportforms/forms/FR_Y-14M20180331_f.zip (last modified Mar. 20, 2018).

140 See, e.g., Andriotis & Glazer, supra note 92.

141 “As of the third quarter, JPMorgan’s credit-card holders had accrued $5.8 billion in rewards they had not yet 

redeemed, up 53% from the end of 2016, according to securities filings.” Id. The Bureau is unable to assess whether 

this trend is similar for other issuers because most issuers do not specifically report credit card rewards liability and 

instead include the figure in accounts payable and other liabilities on the balance sheet.

2015Q1 2016Q1 2017Q1 2018Q1

$120

$140

$160

$180
103 BUREAU OF CONSUMER FINANCIAL PROTECTION — CONSUMER CREDIT CARD MARKET REPORT

customers.142 Some issuers are increasing the number of points or miles required to purchase 

items since there are currently no regulations specifically governing the devaluation or 

annulment of non-cash rewards such as points or miles.143 In fact, credit card agreements may 

include a clause that explicitly allows them to do so.144 Issuers with higher rewards earn rates 

often limit their exposure by placing restrictions on rewards earning in some categories, such as 

limiting high rewards rates to the first $1,500 of spend in a specific merchant category in a given 

quarter or requiring the cardholder take the extra step of going online to “activate” the higher 

rate every quarter.145 While an indirect cost to issuers, it is also notable that some non-rewards 

benefits are also being reduced.146 Some examples of the sorts of benefits that select card issuers 

 

142 See Andriotis & Glazer, supra note 92. See also Nick Ewen, The Ultimate Guide to Credit Card Application 

Restrictions, thepointsguy.com (June 26, 2018), available at https://thepointsguy.com/guide/credit-cardapplication-restrictions/.

143 See, e.g., Jacob Passy, Capital One Quietly Changed Some of its Credit-Card Rewards — Why You Should Care, 

MarketWatch (Apr. 13, 2019), available at https://www.marketwatch.com/story/capital-one-quietly-changed-therewards-program-for-some-of-its-popular-credit-cards-why-all-consumers-should-pay-attention-2019-04-09. For 

rewards programs with a merchant partner (such as an airline), the merchant partner often controls the redemption 

value. See, e.g., Spencer Howard, Chase Hit Hard by United Devaluation, Needs to Step Up Its Game, 

godsavethepoints.com (Apr. 8, 2019), available at https://www.godsavethepoints.com/2019/04/08/chase-hurtby-united-devaluation/.

144 Several agreements reviewed had such clauses. See, e.g., Citigroup Inc., Card Agreement Guide, 

https://www.citicards.com/cards/wv/pdf/CMA_PID410.pdf; American Express Nat’l Bank, Blue Cash Everyday 

Card Cardmember Agreement, 

https://www.americanexpress.com/content/dam/amex/us/staticassets/pdf/cardmember-agreements/blue-casheveryday/Blue_Cash_Everyday_03-31-2019.pdf; Wells Fargo, Summary of the Go Far Rewards Program Terms 

and Conditions and Addendum, and https://www.wellsfargo.com/credit-cards/rewards/terms#rewardssummary.

145 See, e.g., Chase Bank, Here’s Your 5% Cash Back Calendar, https://creditcards.chase.com/freedom-creditcards/calendar (last visited July 15, 2019); Discover Bank, The New 5% Calendar is Here, 

https://www.discover.com/credit-cards/cashback-bonus/cashback-calendar.html (last visited July 15, 2019).

146 “Profitability and managing costs remain top of mind, with some issuers considering changes in card benefits. For 

example, Chase and Citi, among others, are removing or decreasing price protection, while Discover will no longer 

offer extended product warranty, return guarantee, purchase protection, auto rental insurance, and flight accident 

insurance.” J.D. Power Studies, U.S. Credit Card Satisfaction Study—Executive Briefing, J.D. Power (Aug. 14, 

2018).
104 BUREAU OF CONSUMER FINANCIAL PROTECTION — CONSUMER CREDIT CARD MARKET REPORT

or card networks have stopped providing include: purchase protection, return protection, auto 

rental insurance, or lost baggage protection.147

There are also signs that issuers are working to increase their fee revenue from rewards 

products. Since 2015, nearly one in four new rewards cards has carried an annual fee, compared 

to 16 percent on existing rewards cards in 2015. As new cards have been issued, the share of 

rewards cards with an annual fee has grown to 18 percent in 2018. Rewards cards typically carry 

significantly higher annual fees than non-rewards cards. In part, increased demand from 

cardholders for high-annual-fee rewards cards with high benefits is driving the increased fee 

revenues for rewards cards. However, at least two issuers did increase the annual fee on some 

cards for both new and existing cardholders.148 The Bureau has not detected an analogous effort 

to raise interest rate revenue from rewards products.

5.1.3 Digital developments

The easy availability of digital tools to consumers is affecting rewards use, just as it has affected 

other aspects of the card market.149 Issuers are offering digital tools to make the use of rewards 

easier and to make the process of earning and redeeming rewards more transparent. For 

example, some online tools offer potential cardholders the ability to determine whether they 

 

147 See, e.g., Herb Weisbaum, Major Credit Card Companies are Cutting Their Perks. Here's What You Need to 

Know, NBC News (June 18, 2018), available at https://www.nbcnews.com/better/business/major-credit-cardcompanies-are-cutting-their-perks-here-s-ncna884406. In most cases, an issuer reducing card benefits sends 

cardholders an updated “Guide to Benefits” that indicates what changes are being made to their card. Under current 

Regulation Z, cardholders do not have the right to reject changes in ancillary benefits in the same way they are able 

for changes to other credit card terms. For more information on circumstances in which the consumer does have the 

right to reject changes, see 12 C.F.R. 1026.9(c)(2)(iv)(B).

148 See, e.g., Sara Rathner, Citi Prestige Updates to Include Elevated Rewards, Higher Fee, Nerdwallet: Blog (Mar. 8, 

2019), available at https://www.nerdwallet.com/blog/credit-cards/citi-prestige-elevated-rewards-higher-annualfee/; Maria Lamagna, Yielding to Critics, American Express Boosts its Sign-Up Bonus for the Platinum Card, 

Marketwatch (Apr. 1, 2017), available at https://www.marketwatch.com/story/is-the-new-american-expressplatinum-card-worth-it-2017-03-03.

149 For other impacts from digital developments, see Section 8 and Section 4.1.
105 BUREAU OF CONSUMER FINANCIAL PROTECTION — CONSUMER CREDIT CARD MARKET REPORT

would qualify for a sign-up bonus before applying.150 Other new digital tools let cardholders 

monitor their progress toward meeting minimum spending thresholds to receive the sign-up 

bonus.151 Additional online tools let cardholders track how much they are earning in rewards 

across various accounts.152

Third parties are also working to deliver digital information about efficient reward use to 

consumers. For example, one TPC site offers a mobile app that guides cardholders to pay with 

the credit card in the user’s digital wallet that offers the most rewards points, minimizes interest 

charges, or maximizes cash flow.153 Another mobile app operates similarly, while also offering a 

summary of card rewards and benefits.154 The same dynamic applies for ancillary benefits as 

well. In fact, one reason some issuers are reducing benefits may be the emergence of apps that 

enable consumers to take more advantage of such benefits, causing a spike in usage and 

 

150 See, e.g., JT Genter, American Express Launches New Welcome Bonus Qualification Tool, The Points Guy, (June 

13, 2018), available at https://thepointsguy.com/news/amex-new-welcome-bonus-qualification-tool/. Many new 

cardholders apply for cards on the basis of a sign-up incentive that offers a bonus amount of points for meeting 

some minimum spending threshold in the first few months of use. In recent years, as the costs associated with 

introductory reward offers have increased, issuers have also restricted eligibility requirements for these offers. For 

example, an issuer may only permit a consumer to earn one intro bonus per card for the life of the consumer.

151 See, e.g., Katherine Fan, New Chase Tool Shows Your Sign-Up Bonus Spending Progress, The Points Guy (Mar. 

20, 2019), available at https://thepointsguy.com/news/chase-sign-up-bonus-spend-tracker/. 

152 See, e.g., Press Release, Bank of America, Bank of America Introduces My Rewards (Sept. 27, 2018), available at

https://newsroom.bankofamerica.com/press-releases/consumer-banking/bank-america-introduces-my-rewards. 

153 See creditcards.com, Wallet—Pay with the Right Card Every Time. Maximize Your Rewards When You Shop, 

https://www.creditcards.com/mobile/wallet/ (last visited July 15, 2019). 

154 Abhinav Dubey, How We Unlock Automatic Rebates from Price Drops and Other Hidden Credit Card Benefits, 

(May 31, 2017), Sift: Blog Sift, https://www.siftwallet.com/blog/2017/03/12/this-is-sift/. 
106 BUREAU OF CONSUMER FINANCIAL PROTECTION — CONSUMER CREDIT CARD MARKET REPORT

therefore also the cost to issuers of providing them.155 At least one mobile app lets cardholders 

take greater advantage of price protection benefits without requiring action by the cardholder.156

Digital technology also holds the potential of improving cardholder understanding of rewards 

programs. J.D. Power has tracked rewards understanding over its last few surveys, and reports 

that 36 percent of consumers self-report as not fully understanding their rewards products.157

Another study by TPC site NerdWallet found that almost one-half of U.S. consumers

overestimate how much their points, miles and sign-up bonuses are worth.158 However, in its 

2017 Report, J.D. Power noted that “customers who embrace technology and use both their 

issuer’s website and mobile offerings have a greater understanding of their card terms, benefits, 

and rewards.”159

5.2 Balance transfers

Balance transfers enable the consumer, in return for an upfront fee, to pay off debt at a lower 

interest rate for a fixed period. Some credit cards offer introductory rate balance transfers to 

incentivize consumers to apply for the card and, if successful, shift existing balances from other 

cards onto the new one in exchange for potentially lower costs. In addition to transfers of debt 

from another credit card, most balance transfer offers allow consumers to pay off debt related to 

 

155 See Jessica Puckett, Explosion in Claims Force Changes to Credit Card Price Protection Policies, The Points Guy 

(May 25, 2018), available at https://thepointsguy.com/news/higher-claims-force-price-protection-changes/. 

156 Earny, Get Money Back After Your Purchases Drop in Price, https://www.earny.co/home (last visited May 31, 

2019).

157 J.D. Power Studies, U.S. Credit Card Satisfaction Study—Executive Briefing, J.D. Power (Aug. 14, 2018). 

158 Erin El Issa, NerdWallet’s 2019 Travel Credit Card Study, Nerdwallet: Blog (Apr. 10, 2019), available at

https://www.nerdwallet.com/blog/credit-card-data/travel-credit-cards-study/. 

159 Jim Miller, Analyst Briefing – 2017 Credit Card Satisfaction Study, J.D. Power (Aug. 2017).
107 BUREAU OF CONSUMER FINANCIAL PROTECTION — CONSUMER CREDIT CARD MARKET REPORT

other loans and bills.160 Upon conclusion of the promotional period, if the consumer does not 

execute another balance transfer or take steps to repay the balance at the lower rate, the 

remainder of the balance becomes subject to the higher credit card “go to” interest rates.

5.2.1 Prevalence

In 2018, total balance transfer volume of $54 billion accounted for around 9 percent of credit 

card balances in the Y-14+ data. It rose roughly 38 percent from 2015 to 2018, significantly 

outpacing 21 percent growth in balances overall and modestly outpacing 34 percent growth in 

purchase volume.

Balance transfer volume and its growth remain almost entirely concentrated in the superprime 

and prime segments. As a percentage of total balance transfer volume in 2018, superprime and 

prime cardholders made up 72 percent and 25 percent respectively. Their collective share has 

not changed significantly over the past four years, with consumers in lower credit tiers receiving 

very few balance transfer offers. But 2018 was the first year since at least 2015 that saw a decline 

in total balance transfer volume for either superprime or prime segments, with prime 

consumers seeing a 1.7 percent drop in balance transfer volume from 2017.

That same drop shows up in the average incidence of balance transfers, with prime accounts’ 

decline in incidence from 2017 to 2018 the largest change in incidence for any tier over the last 

few years. In fact, incidence has remained flat for most tiers in this period. Overall, for each 

quarter of 2018, an average of 1.6 percent of open accounts held by consumers with prime 

scores, and 1 percent of accounts held by consumers with superprime scores, took out a balance 

transfer. Balance transfer incidence across credit tiers is shown in Figure 4. 

 

160 Many transactions effectuated using a “convenience check” may also be treated as balance transfers by issuers. 

However, not all such transactions are so treated; depending on how it is used, some may be treated similarly to 

cash advances. The Bureau therefore excludes convenience check transactions from this analysis (and from its 

analysis of cash advances in Section 5.3), acknowledging that this likely excludes at least some volume that may be 

identical or near-identical from the consumer perspective.
108 BUREAU OF CONSUMER FINANCIAL PROTECTION — CONSUMER CREDIT CARD MARKET REPORT

QUARTERLY BALANCE TRANSFER INCIDENCE, GENERAL PURPOSE (Y-14+) 

In contrast to average balance transfer incidence, the average size of balance transfers has risen 

markedly. Balance transfers for prime cardholders rose from an average $3,656 in 2015 to 

$4,136, a 13 percent increase. Near-prime cardholder balance transfers increased about 23

percent to $2,845 over the same period. Superprime consumers had the largest average balance 

transfer size in 2018 at $5,453, representing 8 percent growth since 2015.

5.2.2 Cost

Balance transfers generally charge an initial fee, followed by a low interest rate on the 

transferred balance for a set period of time or until the balance is repaid. There may also be a 

cost associated with the loss of a grace period, which can cause an increase in interest charges on 

other purchases.161 Measured as a percentage of the amount that cardholders transfer, the 

average fee for balance transfers has been declining in recent years. Since 2015, the average 

balance transfer fee has fallen from 3.2 to 2.8 percent in 2018. Some issuers offer introductory 

no fee balance transfers for new cards, but this does not appear to be a common practice in the 

industry.162 With respect to grace period impacts on interest charges, some issuers now permit 

 

161 Issuers are required to provide certain disclosures to consumers which include information regarding the potential 

loss of a grace period when balances are not paid in full. 12 C.F.R. § 1026.6(b)(2)(v).

162 See, e.g., Chase Bank Credit Cards, Chase Slate Credit Card, https://creditcards.chase.com/balance-transfercredit-cards/chase-slate (last visited July 15, 2019). See also Edward Jones, Two Valuable Card Options. 

Exclusively for Edward Jones Clients, https://www.edwardjones.com/investments-services/cash-credit/creditcards/credit-cards.html (last visited July 15, 2019). 

2015Q1 2016Q1 2017Q1 2018Q1

0%

0.5%

1.0%

1.5%

Superprime Prime Near-prime Subprime Deep subprime Overall
109 BUREAU OF CONSUMER FINANCIAL PROTECTION — CONSUMER CREDIT CARD MARKET REPORT

consumers to continue to enjoy a grace period on new purchases even while revolving a 

transferred balance during the promotional period. The prevailing practice, however, appears to 

be that revolving balance transfers does eliminate the grace period on regular purchases, 

thereby driving up the cost of those other purchases to consumers. 

5.3 Cash advances

The cash advance feature, offered on many general purpose credit cards, allows consumers to 

obtain cash or cash equivalents using a portion of their card’s credit line (20 percent of the line 

is common), sometimes called the “cash line.”163 Consumers can effect cash advances through a 

variety of means; ATM withdrawals may be the most well-known form of cash advance, but they 

are not the only one. Issuers may treat certain credit card usage, such as chips at a casino or gold 

at a bank, as cash advances. The purchase of foreign currency, traveler’s checks, gift cards, 

prepaid cards, convenience checks, and virtual currencies may also be treated as cash 

advances.164 Cash advances can be incurred, too, if the credit line is used to cover shortfalls on a 

linked deposit account. 

5.3.1 Prevalence

Cash advance volume has only increased 2 percent since 2015, far behind the growth in balances 

and purchase volume over the same period. As of 2018, cash advance balances accounted for 

about 2 percent of balances overall. Cash advance volume is a bit seasonal, typically showing 

slightly higher volumes in the third quarter of each year, but averages over $3 billion per 

quarter.

 

163 To the Bureau’s knowledge, some private label cards provide a cash advance feature at the point of sale, but the 

practice is not common and does not fall within the scope of this section.

164 Many transactions effectuated using a “convenience check” may also be treated as cash advances by issuers. 

However, not all such transactions are so treated; depending on how it is used, some may be treated similarly to 

balance transfers. The Bureau therefore excludes convenience check transactions from this analysis (and from its 

analysis of balance transfers in Section 5.2), acknowledging that this likely excludes at least some volume that may 

be identical or near-identical from the consumer perspective.
110 BUREAU OF CONSUMER FINANCIAL PROTECTION — CONSUMER CREDIT CARD MARKET REPORT

QUARTERLY CASH ADVANCE VOLUME, GENERAL PURPOSE (Y-14+)

Unlike balance transfers, cash advances are available to any cardholder with sufficient available 

cash credit line on a card that has the feature. Cash advance incidence is relatively uniform 

across credit score tiers, with the exception of superprime consumers who use cash advances 

markedly less than all other cardholders. Cash advance incidence has declined over the last few 

years, particularly in the below-prime market segment.

QUARTERLY CASH ADVANCE INCIDENCE, GENERAL PURPOSE (Y-14+)

2015Q1 2016Q1 2017Q1 2018Q1

$0B

$1B

$2B

$3B

$4B

2015Q1 2016Q1 2017Q1 2018Q1

0%

2%

4%

6%

8%

Superprime Prime Near-prime Subprime Deep subprime Overall
111 BUREAU OF CONSUMER FINANCIAL PROTECTION — CONSUMER CREDIT CARD MARKET REPORT

5.3.2 Cost

Cash advances typically have two cost components: upfront fees and interest.165 Fee structures 

can be relatively complex, with some card agreements stipulating different cash advance fee 

percentages and minimum fee amounts for different cash advance transactions, such as lower 

fees for ATM transactions and higher fees for cash equivalents like casino chips.166 Cash advance 

APRs are typically higher than purchase APRs, and these transactions are not usually subject to 

any kind of grace period, meaning they begin accruing interest at that higher APR at the point 

that the cash advance is taken, even if the cardholder pays their balance in full every month.167

Cash advance fees have been stable in recent years, totaling just under $1.5 billion for each of 

the last three years for issuers in the Y-14+ data. As a share of volume, cash advance fees 

averaged 5.3 percent in 2018, roughly the same ratio as in 2016 and 2017. Cash advance fee 

ratios are noticeably higher for cardholders in lower score tiers, as shown in Figure 7. Minimum 

fixed fee amounts for cash advances in a two-way pricing structure, such as “$10 or 5%”, can 

translate to high cash advance fee ratios for cardholders in need of a cash advance, which may 

be unavoidable for cardholders with little remaining available credit on their cards as is common 

for cardholders with lower credit scores. 

 

165 Some credit cards do not charge an upfront fee for cash advances. See, e.g., Brynne Conroy, 20 Credit Cards with 

No Cash Advance Fees, magnifymoney.com (July 1, 2019), available at

https://www.magnifymoney.com/blog/best-of/20-credit-cards-no-cash-advance-fees189115277/. 

166 See, e.g., U.S.Bank, Cardmember Agreement for U.S. Bank National Association Visa Signature and World 

MasterCard Accounts, 

https://applications.usbank.com/oad/teamsite/usbank/docs/FR006213482_04_USBSIG.pdf. 

167 Indirect costs to cardholders such as interest on balances from purchases that would otherwise be treated as 

interest free due to a grace period are not included in calculations of cash advance fee costs, but remain an 

important consideration.
112 BUREAU OF CONSUMER FINANCIAL PROTECTION — CONSUMER CREDIT CARD MARKET REPORT

QUARTERLY CASH ADVANCE FEES RELATIVE TO CASH ADVANCE VOLUME, GENERAL 

PURPOSE ACCOUNTS (Y-14+)

2015Q1 2016Q1 2017Q1 2018Q1

0%

2%

4%

6%

8%

Superprime Prime Near-prime Subprime Deep subprime Overall
113 BUREAU OF CONSUMER FINANCIAL PROTECTION — CONSUMER CREDIT CARD MARKET REPORT

6. Scholarship on CARD Act 

effects

Previous biennial card market reports examined the extent to which trends in the price and 

availability of card credit might be attributable to the CARD Act or to other factors, such as the 

onset of the Great Recession.168 In some cases, the effect of the CARD Act was relatively easily 

discerned. The CARD Act’s late payment fee regulations, for instance, had an obvious direct 

effect on consumer late fee costs.169

In other contexts, however, the Bureau consistently noted the difficulty of separating regulatory 

effects from other effects. This difficulty was apparent for specific regulatory provisions, such as 

the effect of the CARD Act’s minimum payment disclosures on payment behavior, or the effect 

of the Act’s card issuance and marketing restrictions for young consumers on cardholding by 

that population.170 But this difficulty was even more apparent with respect to the overall effect 

of the Act on the credit card market, including aspects of the market indirectly affected by the 

Act, such as credit line assignments or purchase APRs.171 As a result, the Bureau’s first 

comprehensive report, which it released in 2013, called for more research into the causal effects 

 

168 Over time, this biennial report has focused less on quantifying these direct effects and more on changes in the 

market since the report’s last iteration. 

169 See 2013 Report, supra note 5, at 23.

170 See id. at 43-44, 60-61. See also 2015 Report, supra note 5, at 49-52.

171 See 2013 Report, supra note 5, at 69-71. See also 2017 Report, supra note 5, at 158-162.
114 BUREAU OF CONSUMER FINANCIAL PROTECTION — CONSUMER CREDIT CARD MARKET REPORT

of the Act—including the effects of specific provisions as well as the overall effect of the Act on 

price and availability.172 

In the intervening period, social science researchers in economics, psychology, and other 

disciplines have conducted a number of studies of the CARD Act. Such research comes from 

universities as well as the Bureau and other federal agencies. This section reviews that work. The 

review focuses on social science research that has either begun or completed the peer-review

process at leading academic journals and research that presents novel theoretical or empirical 

analyses of the CARD Act. Legal scholarship on the CARD Act is beyond the scope of this review, 

as are policy-oriented papers that largely summarize others’ research in defense of particular 

policy changes.173 This review necessarily is illustrative rather than exhaustive of the available 

literature, though it aims to be as representative as possible, especially among the most actively 

cited research papers in this area.174 Additionally, the views in these research papers do not 

necessarily represent the views of the Bureau, and inclusion of a research paper in this section is 

not meant to imply that the Bureau has validated that research paper’s findings.

Subsection 6.1 considers evidence on the direct effects of the CARD Act, including effects on 

certain aspects of credit card pricing, on the prevalence of credit card-holding among young 

consumers and on consumers’ credit card repayment behavior. That section includes research 

 

172 See 2013 Report, supra note 5, at 37 (“There clearly was an increase in interest rates and in the TCC during the 

year leading up to the date that most of the CARD Act provisions became effective (February 2010) and a decline 

since then, with a net reduction in the Total Cost of Credit of approximately 190 basis points. Further research is 

required to assess how much of that decrease can be attributable to the Act.”). 

173 This iteration of the Bureau’s biennial card market report covers social science research. The Bureau may consider 

a review of legal scholarship in the future.

174 For example, a Google Scholar search for “CARD Act” recovers several thousand possible articles to include in this 

review. Bureau staff reviewed these search results with an aim to include all studies, regardless of their findings, 

that were at some stage of the peer review process, that made a novel theoretical or empirical contribution to social 

science research on the CARD Act, and that were actively cited by other research in the social sciences. 
115 BUREAU OF CONSUMER FINANCIAL PROTECTION — CONSUMER CREDIT CARD MARKET REPORT

papers by Sumit Agarwal et al. (Agarwal et al. (2015))175, Scott Nelson (2018)176, Thomas Durkin

et al. (Durkin et al. (2014))177, Lauren Jones et al. (Jones et al. (2015))178, Hal Hershfield & Neal 

Roese (Hershfield & Roese (2014))179, Linda Salisbury & Min Zhao (2018) (Salisbury & Zhao 

(2018))180, Linda Court Salisbury (Salisbury (2014))181, Daniel Navarro-Martinez et al. (NavarroMartinez et al. (2011))182, Jack Soll et al. (Soll et al. (2013))183, and Peter Debbaut et al. (Debbaut 

et al. (2016)).184

Subsection 6.2 reviews research on the overall effect of the Act, including potentially unintended 

consequences that take account of parts of the credit card market not as directly regulated by the 

Act, such as the Act’s impact on credit line assignments or purchase APRs. That section includes 

 

175 Sumit Agarwal et al., Regulating Consumer Financial Products: Evidence from Credit Cards, 130 Q. J. of Econ. 1, 

at 111-164, (2015).

176 Scott Nelson, Private Information and Price Regulation in the US Credit Card Market, (MIT Working Paper, 

2018)).

177 Thomas Durkin et al., An Assessment of Behavioral Law and Economics Contentions and What we Know 

Empirically about Credit card use by Consumers, 22 S. Ct. Econ. Rev. 1 (2014). 

178 Lauren Jones et al., Effects of informational nudges on consumer debt repayment behaviors, 51 J. of Econ. 

Psychol. 1, at 16-33 (2015).

179 Hal Hershfield & Neal Roese, Dual Payoff Scenario Warnings on Credit Card Statements Elicit Suboptimal 

Payoff Decisions, 25 J. of Consumer Psychol. 1, at 15-27 (2014).

180 Linda Court Salisbury & Min Zhao, Active Choice Format and Minimum Payment Warnings in Credit Card 

Repayment Decisions, (forthcoming J. of Pub. Pol’y & Mktg. (2018). 

181 Linda Court Salisbury, Minimum Payment Warnings and Information Disclosure Effects on Consumer Debt 

Repayment Decisions, 33 J. of Pub. Pol’y & Mktg 1, at 49-64 (2014). 

182 Daniel Navarro-Martinez et al., Minimum Required Payment and Supplemental Information Disclosure Effects 

on Consumer Debt Repayment Decisions, 48 J. of Mktg. Res. S1, at S60-S77 (2011). 

183 Jack Soll et al., Consumer Misunderstanding of Credit Card Use, Payments, and Debt: Causes and Solutions, 32 

J. of Pub. Pol’y & Mktg. 1, at 66-81 (2013).

184 Peter Debbaut at al., The CARD Act and Young Borrowers: The Effects and the Affected, 48 J. of Money, Credit 

and Banking 1, at 1495-1513 (2016).
116 BUREAU OF CONSUMER FINANCIAL PROTECTION — CONSUMER CREDIT CARD MARKET REPORT 

research papers by Tiago Pinheiro & Joshua Ronen (Pinheiro & Ronen (2016))185, Suting Hong 

(Hong et al. (2018))186, Agarwal et al. (2015), Nelson (2018), Song Han et al. (Han et al. 

(2018))187, Vikram Jambulapati & Joanna Stavins (Jambulapati & Stavins (2014))188, Gregory 

Elliehausen & Simona Hannon (Elliehausen & Hannon (2018))189, Larry Santucci (Santucci 

(2015))190, and Yiwei Dou et al. (Dou et al. (2019)).191

This review of overall effects is in two parts. First, it covers research that uses theoretical 

analyses or economic models to predict and explain the potential overall effects of the Act. 

Second, this review identifies empirical analyses that evaluate which of these theoretical effects 

appear to have transpired, and how large these overall effects have been. 

6.1 Direct effects 

Studies that examine direct effects of the CARD Act have focused on three areas: penalty fee 

pricing and incidence; repayment behavior; and cardholding among young consumers. These 

 

185 Tiago Pinheiro & Joshua Ronen, Unintended Consequences of the Credit Card Act, 1 J. of L., Fin. and Acct., 1, at 

93-138 (2016). 

186 Suting Hong et al., Dynamic Pricing of Credit Cards and the Effects of Regulation (Fed. Res. Bank of Philadelphia 

Working Paper No. 18-23 (2018)). 

187 Song Han et al., Unsecured Credit Supply, Credit Cycles, and Regulation, 31 The Rev. of Fin. Stud. 3, at 1184-1217 

(2018). 

188 Vikram Jambulapati et al., The Credit CARD Act of 2009: What Did Banks Do?, (Fed. Res. Bank of Boston, Public 

Policy Discussion Paper Series 2015-103, (2014)). 

189 Gregory Elliehausen & Simona M. Hannon, The Credit Card Act and consumer finance company lending, 34 J. of 

Fin. Intermediation, 1, 109-119, (2018). 

190 Larry Santucci, A Tale of Two Vintages: Credit Limit Management Before and After the CARD Act and Great 

Recession, (Fed Res. Board of Philadelphia, Payment Cards Center Discussion Paper No. 15-01, (2015)). 

191 Yiwei Dou et al., Does Price Regulation Affect Competition? Evidence from Credit Card Solicitations, (Fed. Res. 

Board, FEDS Working Paper No. 2019-018 (2019)). 
117 BUREAU OF CONSUMER FINANCIAL PROTECTION — CONSUMER CREDIT CARD MARKET REPORT

areas do not exhaust direct effects of CARD Act regulation, so there is room for future research 

to shed light on other important areas affected by the Act. These might include, for example, 

direct effects of the ability to pay (ATP) requirements on application approvals and credit limit 

increases, and direct effects of the “fee-harvester” restrictions for first-year account fees on the 

terms of affected accounts.192 Nevertheless, the available research considers several important 

areas in which the Act has had a measureable direct effect. 

6.1.1 Credit card pricing

The CARD Act restricted multiple dimensions of credit card pricing, including requirements 

that: (1) consumers not pay a fee for incurring balances in excess of their credit limit unless they 

opt in to have such fees charged; (2) penalty fees, such as late payment fees, be “reasonable and 

proportional,” which can be satisfied by charging fees at or below a specified safe harbor 

threshold; and (3) interest rates not be increased on outstanding balances except in limited 

circumstances.193 In its 2013 Report, the Bureau called for further academic research to connect 

these restrictions to changes in the market.194 In the years since that report, a number of 

academic studies have attempted to do just that.

OVER-LIMIT FEES

First, several studies have worked to quantify the CARD Act’s direct effects on over-limit fees. 

Agarwal et al. (2015) estimate that the CARD Act led to a 3.3 percentage point reduction in overlimit fees as a share of balances for consumers with below-prime credit scores. These 3.3 

percentage points are approximately 20 percent of total pre-CARD Act fee costs that the authors 

estimate such consumers paid, or roughly $36 in over-limit fee savings for each subprime 

 

192 See, e.g., 12 C.F.R. 1026.51(a)(1)(i), 52(a)(1). 

193 15 U.S.C. §§ 1637(i)(1), 1637(k), 1665d, 1666i-1, 1666i-2 (2012); see 2013 Report, supra note 5, at 10-13 (for further 

discussion of these and other particular provisions in the CARD Act).

194 See supra note 172.
118 BUREAU OF CONSUMER FINANCIAL PROTECTION — CONSUMER CREDIT CARD MARKET REPORT

account on average per year.195 For consumers with higher credit scores, the reduction in overlimit fees as a share of outstanding balances was a more modest 0.3 percentage points. This 

difference reflects both the lower prevalence of over-limit transactions among consumers with 

higher credit scores and the higher average balances on these consumers’ accounts. 

To estimate these effects, the Agarwal et al. (2015) study compares changes over time for general 

purpose consumer credit cards, which are subject to the CARD Act rules, to changes for small 

business credit cards, which are not. This comparison uses small business cards to help identify 

the market changes that would have been seen for consumer credit cards in the absence of the 

CARD Act rules. While a similar analysis appeared in the Bureau’s first biennial credit card 

market report,196 the Agarwal et al. (2015) study additionally shows the robustness of its results 

in the framework of a difference-in-differences regression analysis. Furthermore, that analysis 

controls statistically for differences across cardholder credit scores and differences across credit 

card issuers, which could otherwise potentially confound such an analysis. This regression 

analysis also verifies that small business cards are likely to provide a statistically valid 

comparison group for general purpose consumer cards after the CARD Act, by illustrating that 

the two groups of cards broadly exhibited similar—in particular, parallel—trends in the period 

prior to the CARD Act.197

Nevertheless, there are also important caveats to any such comparison of pre- and post-CARD 

Act outcomes. For one, the comparison relies on pre-CARD Act data that may have been 

influenced in one way or another by other important factors for which the studies potentially 

could not fully control. One of these factors could be the credit card industry’s anticipation of 

CARD Act implementation, and also the industry’s anticipation of changes to credit card 

 

195 This 20 percent is estimated using the statistics in Agarwal et al., (2015) at Table III.

196 2013 Report, supra note 5, at 35-36.

197 The effects of over-limit fee restrictions are studied in other analyses as well. Nelson (2018) finds that the share of 

consumer accounts that incurred an over-limit fee each month dropped from roughly 7 percent of accounts per 

month on average before the CARD Act to nearly zero after the Act. Similar results on the share of accounts 

incurring over-limit fees appeared in the Bureau’s first biennial credit card market report. See 2013 Report, supra

note 5, at 20-23.
119 BUREAU OF CONSUMER FINANCIAL PROTECTION — CONSUMER CREDIT CARD MARKET REPORT

regulations that, while superseded by the CARD Act, were proposed and finalized by the Federal 

Reserve Board over the course of 2007 through 2009.198 Indeed, commentators on the Agarwal

et al. (2015) study have emphasized the importance of such effects (e.g., Durkin et al. (2014)).199

A second potentially confounding factor is the Great Recession. In difference-in-differences 

analyses it is difficult to know with certainty whether small business cards and consumer cards 

would have evolved differently in the absence of the CARD Act because of recession-related 

changes.

LATE PAYMENT FEES

The Agarwal et al. (2015) and Nelson (2018) research examines other prominent dimensions of 

credit card pricing. Agarwal et al. (2015) estimate that the CARD Act’s restrictions on late 

payment fees led to a 1.4 percentage point reduction in late fees as a share of balances for 

consumers with below-prime credit scores. The restrictions once again had a more modest 

effect, roughly 0.3 percentage points as a share of outstanding balances, for consumers with 

higher scores. 

As before, the Agarwal et al. (2015) study uses regression analysis to show the robustness of its 

results while controlling for differences across cardholder credit scores and across credit card 

issuers. After accounting for these factors, the study’s results are derived from a comparison 

between general purpose consumer credit cards and small business credit cards. As in the case 

of over-limit fees, the study illustrates that late payment fees on consumer and small business 

cards exhibited similar trends prior to the CARD Act, supporting the validity of small business 

cards as a comparison group for consumer cards. However, also as before, the study relies on 

 

198 In February 2010, the Board withdrew the final rule amending Regulation Z adopted in January 2009 and 

amended Regulation AA to remove the substantive requirements adopted in January 2009 before these final rules 

became effective. 75 Fed. Reg. 7925 (Feb. 22, 2010). At the same time, the Board issued a new final rule amending 

Regulation Z in order to implement the provisions of the CARD Act. 75 Fed. Reg. 7658 (Feb. 22, 2010). The 

requirements of the January 2009 Regulation Z final rule were revised for consistency with the CARD Act and 

incorporated into the new final rule. The provisions in the January 2009 Regulation AA final rule never took effect; 

they were superseded by provisions of the CARD Act. 

199 These features of the pre-CARD Act period have also been consistently noted in the Bureau’s previous biennial 

credit card market reports. See, e.g., 2013 Report, supra note 5, at 73.
120 BUREAU OF CONSUMER FINANCIAL PROTECTION — CONSUMER CREDIT CARD MARKET REPORT

data from a pre-CARD Act period that may have been influenced by anticipation of regulatory 

changes or by the onset of the Great Recession.

These decreases in late payment fees largely reflect the lower average dollar amount of late fees 

following implementation of the CARD Act’s “reasonable and proportional” standard in August 

2010.200 Nelson (2018) also finds that the share of revolving accounts incurring late fees on a 

monthly basis dropped by roughly 3 percentage points, from 14 to 11 percent, at an earlier date 

in February 2010, immediately following the implementation of other CARD Act restrictions. 

This earlier drop could reflect other provisions that took effect in February, including the CARD 

Act’s standardization of the days and times of day at which payments could be due,201 or the 

CARD Act’s mandated new minimum payment warning, or other changes in the market 

following the financial crisis.202

INTEREST RATE INCREASES

The Agarwal et al. (2015) and Nelson (2018) research also examines the CARD Act’s restrictions 

on a third dimension of credit card pricing, the upward repricing of interest rates on outstanding 

balances.203 Nelson (2018) documents that, in the pre-CARD Act period, roughly 50 percent of 

accounts experienced such an upward repricing at least once a year. After the CARD Act 

repricing restrictions took effect, the annual incidence of such repricing dropped immediately to 

less than 10 percent. To focus on types of APR repricing that were restricted by the Act, these 

estimates exclude APR changes associated with the expiration of a promotional rate, with a 

delinquency of 60 days or more, or with an increase in an index rate that may determine some 

credit cards’ variable APRs. Estimates of the share of accounts experiencing repricing also 

appear in Agarwal et al. (2015)204 although without an emphasis on the share of accounts 

experiencing such a repricing at an annual frequency; the Nelson (2018) analysis indicates that, 

 

200 15 U.S.C. § 1665d (2012); 12 C.F.R. § 1026.52(b)(1); Comment 52(b)(1)(ii)-2.

201 15 U.S.C. §§ 1637(b)(12)(c), 1637(o), 1666c(a) (2012); 12 C.F.R. §§ 1026.7(b)(11)(i)(A); see generally 1026.10(b), 

(d).

202 15 U.S.C. § 1637 (b)(11) (2012); 12 C.F.R. § 1026.7(b)(12).

203 15 U.S.C. § 1666i-1, 1666i-2 (2012); 12 C.F.R. § 1026.55.

204 See also 2013 Report, supra note 5, at 29.
121 BUREAU OF CONSUMER FINANCIAL PROTECTION — CONSUMER CREDIT CARD MARKET REPORT

when accounts are viewed over the course of an entire year, such repricing affected roughly onehalf of revolving accounts. However, as already emphasized above, the pre-CARD Act period 

studied in both the Nelson (2018) and the Agarwal et al. (2015) analyses may have exhibited 

above-average rates of repricing relative to earlier time periods, e.g., due to the onset of the 

Great Recession or issuers’ anticipation of regulatory changes that were proposed prior to the 

CARD Act. 

The Nelson (2018) analysis also examines how the CARD Act’s repricing restrictions may have 

affected the responsiveness of interest rates to credit risk. With issuers now generally restricted 

from increasing the interest rate on outstanding balances on accounts with worsening default 

risk over time, the study examines how that change has affected the degree to which price 

changes reflect changes in underlying default risk. It finds that whereas APRs in the pre-CARD 

Act period increased on average by 26 basis points for every 10 points decrease in credit score 

after origination, this gradient of pricing with respect to changes in risk declined post-CARD Act 

to an average of 7 basis points increase in APR for every 10 points decrease in credit score. The 

CARD Act’s restrictions on interest rate increases on outstanding balances, therefore, affected 

not just changes in interest rates on average, but also the degree to which interest rates 

responded to changes in particular account characteristics such as credit score.

6.1.2 Credit card payments

Separate from the CARD Act’s restrictions on credit card pricing, the Act and its implementing 

regulation also introduced new disclosure requirements. Some academic research has focused 

on one of these disclosures in particular: mandated monthly statement information about the 

total cost of paying only the minimum payment and about the amount of time required to repay 

the entire current balance when making only minimum payments. This disclosure also includes 

information about the size of the monthly payment necessary to pay the outstanding balance in 

36 months, referred to below as the “36-month payment amount,” and how the total interest 

cost of repaying the outstanding balance by paying the 36-month payment amount would 
122 BUREAU OF CONSUMER FINANCIAL PROTECTION — CONSUMER CREDIT CARD MARKET REPORT

compare to the cost of repaying the outstanding balance by paying only the minimum 

payment.205

The available research provides somewhat conflicting evidence on how these disclosures affect 

repayment behavior. Differences across studies also indicate there may be variation in how 

different consumers respond to these disclosures. There is evidence that these disclosures may 

encourage faster debt repayment for some consumers while leading some other consumers, who 

would otherwise choose to repay their balance more quickly, to reduce their rate of repayment.

Jones et al. (2015) compare changes in credit card payment over time for two groups that 

plausibly were differentially affected by the CARD Act’s disclosure requirements. The first 

group, consumers who pay their bills online, is presumed to be less likely to see the new CARD 

Act-mandated disclosures because these disclosures are not required to appear in an online billpay interface. The second group, consumers who do not use electronic bill payment, may be 

more likely to see the new disclosures because the disclosures are included on billing statements 

sent by mail.206 

Jones et al. (2015) estimate that the second group—those plausibly more exposed to the new 

disclosures by virtue of paper bill pay—became 6.5 percentage points more likely to pay their 

credit card bill in full relative to those who use online bill pay.207 This effect is estimated in a 

difference-in-differences regression analysis that also controls for demographic, geographic, and 

seasonal differences that could otherwise confound the results. Reinforcing the validity of online 

bill pay users as a comparison group for paper bill pay users, the study also notes that these 

 

205 15 U.S.C. § 1637(b)(11)(B) (2012). In cases where the 36-month payment amount is less than the minimum 

monthly payment, no information about 36-month repayment is shown. 12 C.F.R. § 1026.7(b)(12)(F)(2)(ii).

206 The disclosures are also included in electronic copies of billing statements, and these electronic statements indeed 

may be seen by consumers who use online bill pay. Furthermore, consumers who pay their bills online may 

nevertheless receive paper copies of their bills by mail. However, past Bureau work has indicated that at least onehalf of consumers who use online bill pay also view their statement document at any point in a given quarter. See

2015 Report, supra note 5, at 134. This finding at least in part supports the premise that the two groups studied in 

Jones et al. (2015) could be differentially affected by the CARD Act’s disclosure requirements.

207 This increase in the prevalence of payment in full may reflect decreases in either the prevalence of late payments, 

or the prevalence of timely payments of less than the total balance on the card, and the authors do not distinguish 

between these two possible mechanisms.
123 BUREAU OF CONSUMER FINANCIAL PROTECTION — CONSUMER CREDIT CARD MARKET REPORT

groups exhibited similar trends in repayment behavior in the pre-CARD Act period, while the 

divergence in these two groups’ behavior occurred tightly around the month when the new 

disclosure requirements took effect. 

One important caveat to this study’s results is that the survey is asked of new respondents each 

month, so changes over time in average responses could potentially be the result of changes in 

the composition of consumers who choose to respond to the survey, rather than changes to 

consumer behavior; techniques to correct for non-response over time may be unable to 

completely correct for such issues. Additionally, to interpret the February 2010 divergence 

between online bill-pay users and paper bill-pay users as the effect of the CARD Act disclosures

per se, the authors rely on there being no other substantial differences between these two 

groups’ responses to other CARD-Act provisions implemented at the same time. Such an 

assumption is difficult to test in practice.

Several other studies have examined the effects of the CARD Act’s minimum payment disclosure 

requirements by experimentally showing different disclosure formats to survey respondents and 

then asking respondents how much they would choose to repay under a hypothetical scenario 

for credit card usage. For example, respondents could be asked to imagine that they have a 

certain credit card balance at a certain interest rate, then be shown one of several minimum 

payment disclosures, and be asked to choose a hypothetical repayment amount. 

In one such study, Hershfield & Roese (2014) reach different conclusions about the CARD Act’s 

minimum payment disclosures relative to Jones et al. (2015) and highlight the potential for 

these disclosures to induce slower debt repayment by “anchoring” consumers to smaller 

payment amounts than they otherwise would have chosen. Based on survey respondents’ 

answers to such hypothetical scenarios and disclosures, the authors conclude that one feature of 

the CARD Act’s new disclosures—in particular the disclosure of the 36-month payment 

amount—leads some consumers to repay more slowly than they otherwise would. Consistent 

with this effect appearing only for some consumers and not for others, the authors find in their 

series of surveys that this effect is statistically significant only when the payment suggested by 

the 36-month disclosure is small relative to the payment amount consumers would have 

otherwise chosen.

Other studies by Salisbury and co-authors (Salisbury & Zhao (2018); Salisbury (2014); NavarroMartinez et al. (2011) and by Soll et al. (2013)) also provide survey respondents with 

hypothetical scenarios for credit card usage and experimentally vary the disclosures shown to 
124 BUREAU OF CONSUMER FINANCIAL PROTECTION — CONSUMER CREDIT CARD MARKET REPORT

respondents. The earliest of these studies, by Navarro-Martinez et al. (2011) finds that providing 

any minimum payment requirement tends to lower the amount that survey respondents choose. 

They attribute this to an “anchoring” effect whereby presenting the minimum payment amount 

causes consumers to focus on a lower number (i.e., the minimum payment amount) than they 

otherwise do when shown only the hypothetical outstanding balance on the account. However, 

the study also finds that adding the 36-month payment amount to the disclosure, as required in 

the CARD Act, partially offsets this effect and raises repayment amounts.208 Consistent with this 

effect, Soll et al. (2013) likewise find that adding the 36-month payment amount increases some 

consumers’ ability to accurately predict how long it may take to repay a credit card balance. 

These findings are thus somewhat in tension with the results in Hershfield & Roese (2014), 

which had found that adding the 36-month payment amount decreases some consumers’ 

repayment speed. 

The most recent two of these studies, by Salisbury (2014) and Salisbury & Zhao (2018), find 

results that are intermediate between the Navarro-Martinez et al. (2011) results and the 

Hershfield & Roese (2014) results. Again using survey respondents’ answers to hypothetical 

credit card repayment scenarios, Salisbury (2014) and Salisbury & Zhao (2018) generally find 

that disclosing the 36-month payment amount both increases and decreases consumers’ 

payment rates: that is, some consumers pay less when faced with the 36-month payment 

amount than they otherwise would, and other consumers pay more than they otherwise would. 

Across the two studies, roughly an equal share of consumers increase their payment amount and 

decrease their payment amount.

An important caveat to many of these studies is that the use of hypothetical questions in survey 

research may capture different behaviors and responses than “real world” consumers exhibit 

when facing the CARD Act’s actual disclosures. For example, the effect of anchoring to 

repayment amounts shown in hypothetical disclosure statements may be different when 

consumers face real-world financial incentives to choose the repayment amount that is best for 

their own actual circumstances. These hypothetical studies’ methodologies are thus in contrast 

 

208 One caveat to this latter result is that it is only marginally statistically significant, perhaps due to small sample 

sizes available in the study.
125 BUREAU OF CONSUMER FINANCIAL PROTECTION — CONSUMER CREDIT CARD MARKET REPORT

with the Jones et al. (2015) study discussed above, which did use such “real world” data to 

examine the CARD Act disclosures’ effects.

The Agarwal et al. (2015) study also examined the effect of the CARD Act’s 36-month disclosure 

in “real world” data, finding that the share of accounts paying exactly the 36-month payment 

amount increased by 0.4 percentage points for general-purpose consumer cards at the time the 

new disclosure requirement took effect; this estimate is markedly smaller than the 

corresponding share in many of the studies above that used hypothetical scenarios to examine 

consumer behavior. As in the analyses previously discussed from Agarwal et al. (2015), this 

effect is estimated in a difference-in-differences regression relative to small business credit 

cards, which were not covered by the CARD Act’s new disclosure requirements. However, 

perhaps reflecting the divergence in results among other research studies in this area, Agarwal 

et al. (2015) note that it is difficult to discern statistically whether this o.4 percentage-point 

difference is due to consumers who would have paid larger amounts then choosing to pay less, 

or due to consumers who would have paid smaller amounts then choosing to pay more, or 

perhaps both. 

In sum, existing research appears split on the question of whether the CARD Act’s minimum

payment disclosures led to faster debt repayment, and for whom. Further research appears 

necessary to answer this question more definitively and to analyze other outcomes not examined 

in the studies available to date.

6.1.3 Credit card-holding among young consumers

Another focus of academic research has been the CARD Act’s effects on credit card-holding 

among young consumers. This focus reflects the CARD Act’s requirement, as implemented by 

Regulation Z, that in order for an issuer to open a credit card account for a young consumer—

defined as being 20 years old or younger—the consumer must either demonstrate her 

independent ability to pay for the charges they could incur on the card, or have a co-signer who 

is at least 21 years old and either can demonstrate the independent ability to repay or can 
126 BUREAU OF CONSUMER FINANCIAL PROTECTION — CONSUMER CREDIT CARD MARKET REPORT

demonstrate a reasonable expectation of access to the necessary income or assets to repay.209

The CARD Act also has several other provisions that may affect credit card-holding among the 

young, such as restrictions on credit card marketing activities near college campuses.210

Debbaut et al. (2016) estimate the direct effects of these young-borrower restrictions by 

comparing consumers who were affected by the CARD Act’s young-consumer rule at slightly 

different ages. By measuring how card-holding rates for these cohorts changed over time as the 

CARD Act restrictions took effect, the authors estimate that the CARD Act’s young consumerrule reduced rates of credit card-holding among individuals under 21 years old by 8 percentage 

points in the short term, representing a roughly 15 percent fall from pre-CARD Act levels. Their 

difference-in-differences analysis also controls for age-specific and year-specific differences in 

credit card holding rates, which helps address potential confounding factors in the analysis.

Evidence suggests the rule’s allowance for co-signers in the young-consumer rule enabled some, 

but not all, young consumers who otherwise would have been precluded from opening a credit 

card account to do so through a co-signer. Debbaut et al. (2016) found that, while the overall 

share of young consumers holding credit cards fell, young consumers who did hold credit cards 

became more likely to have a co-signer on their credit card. As shown in Figure 1, among various 

age cohorts the share of co-signed cardholding among credit card holders was roughly constant 

at about 8 percent between 2000 and 2008. When the CARD Act’s young-consumer rule took 

effect in 2010, the rate of co-signed cardholding increased for exactly the three age groups 

covered by the young-consumer rule—those aged 18, 19, and 20 years old.211 This short-run 

effect is apparent in Figure 1 below. The decrease seen thereafter, however, suggests the need for 

further research on the longer-run effects of these restrictions. 

Debbaut et al. (2016) acknowledge that their estimates may be sensitive to several confounding 

factors. These include recession-related labor market disruptions that may affect specific 

cohorts in specific years, changes in the population of consumers included in credit bureau data, 

 

209 15 U.S.C. § 1637(c)(8) (2012); 12 C.F.R. § 1026.51(b)(1). 

210 15 U.S.C. § 1650(f)(2) (2012).

211 The increases appear sharpest for those aged 18, though this group also exhibited some increase in the period prior 

to the young-consumer rule taking effect, perhaps related to the onset of the Great Recession.
127 BUREAU OF CONSUMER FINANCIAL PROTECTION — CONSUMER CREDIT CARD MARKET REPORT

and the influence of potential anticipatory behavior by consumers or credit card issuers in 2009 

in the period between the CARD Act’s passage and its implementation. Closer examination of 

the role of authorized users in extending credit card access to young consumers—for example, 

an older person such as a parent may make a young consumer an authorized user of their card—

may also help with interpreting Debbaut et al.’s results.

SHARE OF CONSUMERS WITH A CO-SIGNED CREDIT CARD BY AGE AND YEAR (REPRODUCED 

WITH PERMISSION)212

6.2 Overall effects

This section considers research on the overall effects of the CARD Act. As emphasized in 

academic research on the CARD Act, economic theory on pricing, and in the Bureau’s previous 

biennial card market reports, the Act’s effects may include unintended consequences beyond its 

direct effects, as market participants potentially respond to regulation in one part of the market

by changing their behavior in another. To take one example, credit card issuers might adjust 

APRs offered at account origination in response to the Act’s restrictions on increasing APRs on 

 

212 Figure reproduced with permission from Wiley, in Debbaut et al. (2016).
128 BUREAU OF CONSUMER FINANCIAL PROTECTION — CONSUMER CREDIT CARD MARKET REPORT

outstanding balances later; this is an example of an indirect and potentially unintended 

consequence of the Act because the Act and its implementing regulations do not directly govern 

the level of the APRs that may be offered at origination. 

This review of research on such overall effects is organized into two subsections. The first 

reviews theoretical analyses and economic modeling that illustrate how and why such 

consequences may appear in other parts of the market in response to the Act. The second 

reviews empirical research that assesses, using a variety of data sources, which of these 

theoretical effects appear to have been realized and to what extent. 

6.2.1 Theoretical analyses

A range of studies have used theoretical analyses and economic models to understand the CARD 

Act’s potential overall effects. Reviewing these analyses helps illuminate how the Act’s overall 

effects may emerge in a market like the credit card market, shedding light on the next 

subsection’s review of more empirical, data-driven research.

In particular, these theoretical analyses highlight how the Act’s overall effects depend on several 

underlying features in the credit card market. These features include whether the market is 

imperfectly competitive, whether credit card issuers have private information about their 

account holders (and, if so, what type of information), and whether credit card pricing is fully 

“salient” to consumers. This subsection first reviews research that examines the CARD Act’s 

theoretical effects in a credit card market that is assumed to be perfectly competitive. Second, it 

reviews research on a market that is assumed to be imperfectly competitive.

PERFECT COMPETITION

In one theoretical analysis of the CARD Act in an assumed perfectly competitive credit card 

market, Pinheiro & Ronen (2016) emphasize how the CARD Act’s overall effects may be 

influenced by the presence of information asymmetries such as adverse selection. In this setting, 

the authors show theoretically that the CARD Act’s restrictions on increasing the interest rate 

applied to an outstanding balance can lead to a combination of higher initial interest rates for 

new cardholders and lower credit limits. The analysis highlights how the CARD Act’s restrictions 

on raising interest rates for outstanding balances can make it more difficult to charge different 

pricing to consumers who are more or less risky from a lender’s perspective, given how 

information asymmetries can make some of this risk unknown for a credit card issuer around 
129 BUREAU OF CONSUMER FINANCIAL PROTECTION — CONSUMER CREDIT CARD MARKET REPORT

the time of account origination.213 The “pooled” pricing that results from these restrictions then 

leads to market inefficiencies, as some borrowers face pricing that is not commensurate with 

their risk and then borrow more or less than the efficient amount; for some consumers this 

increase in pricing is effectively a reduction in credit supply. In Pinheiro & Ronen’s (2016) 

perfectly competitive setting, therefore, the inefficiencies that result from the CARD Act’s 

restrictions emerge in equilibrium as a result of the credit card market’s information 

asymmetries.

Hong et al. (2018) analyze a similar setting with perfect competition, albeit with different 

information asymmetries. In particular, the authors consider the feature that credit card issuers 

may have private information about their borrowers that competing credit card issuers may not 

know, such as non-public indicators of default risk. This informational advantage allows an 

issuer to charge higher prices to its existing borrowers—in particular to its low-risk existing 

borrowers—than it otherwise could charge those borrowers if its competitors were able to 

identify which of its existing borrowers had low risk.214 The prospect of being able to charge 

these higher prices after learning about borrower risk then entices issuers to offer low prices at 

account origination before learning such information. These low prices on new accounts, 

understood as promotional introductory interest rates, play a central role in the analysis. Their 

key finding is that the CARD Act’s restrictions on interest rate increases for outstanding 

balances make it more difficult for credit card issuers to charge higher prices on existing 

accounts, which reduces issuers’ incentives to offer low prices at the time of account origination. 

The CARD Act, then, has the potential in this setting to lead to higher interest rates for 

promotional APRs, even though the Act and its implementing regulations do not directly 

regulate the level of interest rates offered as promotional APRs. 

 

213 Asymmetry implies that this information is known on one side of the market and not the other. To be precise, in 

Pinheiro & Ronen’s (2016) model, the asymmetry actually arises shortly after origination: that is, differences in 

consumer risk become known to the consumer after origination but before the consumer begins borrowing on the 

card. Of course, in the actual credit card market, information asymmetries may also exist at the time of origination 

as well.

214 The mechanism for this higher pricing arises in market equilibrium. Intuitively, while a lender’s competitors are 

unable to set prices that are perfectly tailored to the risk on that lender’s accounts, each lender is able to set such 

tailored prices on its own accounts. Pricing on outside offers then allows each issuer to charge a higher price than it 

otherwise could to its own lower-risk existing cards. 
130 BUREAU OF CONSUMER FINANCIAL PROTECTION — CONSUMER CREDIT CARD MARKET REPORT

The results in Hong et al. (2018) echo the findings from Pinheiro & Ronen (2016). An important 

commonality between the analyses is that the credit card market is assumed to be perfectly 

competitive. That is, credit card lending is deemed sufficiently “commoditized” for issuer profits 

to be fully competed away through, for example, discounts on introductory interest rates that 

serve as a loss leader for later, higher pricing.

Several caveats are relevant in interpreting these analyses. Both analyses illustrate how the 

credit card market is likely to respond to the CARD Act given some premises, such as perfect 

competition. If the premises that the authors use for their analysis do not accurately describe the 

market, then the conclusions may change. As is common in theoretical economic work, these 

analyses also require simplifying assumptions to make the model tractable to analyze. For 

example, theoretical analyses of credit markets often assume, as these two studies do, that 

borrowers are of only two “types,” each having a different risk of default but an identical 

demand for credit. In reality, credit markets may be more complex. Further research may be 

needed to understand the consequences of these complexities. 

IMPERFECT COMPETITION 

The alternative case of an imperfectly competitive credit card market is studied in Nelson 

(2018). This analysis considers credit cards as potentially differentiated products, so that credit 

card issuers have the potential to earn profits because of brand loyalty or because they offer 

features that competing cards do not. It also allows for credit card issuers to have private 

information about their existing customers, as in Hong et al. (2018), though this private 

information can comprise information not just about borrowers’ riskiness, but also about their 

sensitivity to price. Nelson (2018) demonstrates that in such a setting, it is possible for 

restrictions such as those in the CARD Act to lead to lower prices overall for consumers. The key 

mechanism for this result is the feature that credit card issuers are considered to potentially 

have private information about borrowers’ price sensitivities that is revealed after origination, 

which potentially generates market inefficiencies through markups on price-insensitive 

borrowers.215 However, whether the CARD Act’s restrictions do in fact lead to lower overall 

 

215 Such price discrimination per se is not necessarily inefficient. However when consumers choose both whether to 

borrow (extensive margin) and how much to borrow (intensive margin), price discrimination in marginal prices 

such as APRs can result in inefficient quantities—with outcomes analogous to a reduction in credit supply.
131 BUREAU OF CONSUMER FINANCIAL PROTECTION — CONSUMER CREDIT CARD MARKET REPORT

prices in the Nelson (2018) model depends on factors such as how close to perfectly competitive 

the market is and how much private information credit card issuers acquire over time about 

their customers’ default risk and demand for credit. 

Considering different potential features of the credit card market, Agarwal et al. (2015) also 

show theoretically that the CARD Act can lead to lower pricing in an imperfectly competitive 

market. Rather than focusing on credit card issuers’ private information in such a setting, 

Agarwal et al. (2015) emphasize the role of pricing that may not be fully salient to consumers. 

One applied example, the case of over-limit fees, can illustrate this. The authors show 

theoretically that if over-limit fees are less salient to consumers than other price dimensions, 

and if the market is imperfectly competitive, then other price dimensions will adjust less than 

would fully offset the decrease in over-limit fees. In the context of imperfect competition and 

imperfectly salient fees, restrictions such as those in the CARD Act can indeed lower the all-in 

cost of credit, as the offsetting effect in other price dimensions such as interest rates would not 

fully overwhelm the direct effect of lower fees.216

Similar caveats apply to Nelson (2018) and Agarwal et al. (2015) as were noted above for Hong 

et al. (2018) and Pinheiro & Ronen (2016). These analyses only show what effects of the CARD 

Act are likely to emerge if the premises of the models, such as behavioral assumptions217 or

imperfect competition, accurately describe the credit card market. Furthermore, even if these 

premises are consistent with the reality of the market, economic models frequently need to 

make simplifying assumptions that may overlook important complexities in the market.

6.2.2 Empirical analyses

The theoretical research reviewed above prompts the empirical question of whether the Act’s 

restrictions in fact resulted in unintended offsetting consequences elsewhere in the market, in 

 

216 See Agarwal et al. (2015)’s online appendix, at 4. The presence of asymmetric information can also affect the 

amount of offset. If the credit card market is adversely selected with respect to its salient prices, such that 

consumers willing to borrow at higher salient prices also tend to have higher default risk, then the amount of offset 

from a restriction on a non-salient price would be greater than it would be without such adverse selection.

217 See Durkin et al. (2014) (discussing salience and the lack of empirical evidence to support it and related behavioral 

assumptions). See also Jonathan Zinman, Consumer Credit: Too Much or Too Little (or Just Right?), J. of Legal 

Stud. (2014).
132 BUREAU OF CONSUMER FINANCIAL PROTECTION — CONSUMER CREDIT CARD MARKET REPORT

particular some combination of increases to other dimensions of pricing or decreases in credit 

supply. Consequences such as price increases could take many forms, including higher initial 

APRs, less availability of promotional APRs, or increases in other fees such as annual fees. 

Similarly, reductions in credit supply could take the form of fewer or smaller credit limit 

increases, lower initial line assignments, fewer direct mail offers and offers through other 

marketing channels, and tighter approval criteria. This subsection reviews empirical research on 

these questions, organized by whether the research pertains to credit card pricing or credit 

availability. 

CREDIT CARD PRICING

This subsection reviews empirical research on the CARD Act’s overall effects on credit card 

pricing. Economic theory predicts that when market prices are prevented by law or regulation 

from adjusting to market conditions, such restrictions on price typically create unintended 

consequences such as shortages or surpluses. The central question in the CARD Act research has 

been whether or not the Act’s direct effects on some dimensions of credit card pricing, such as 

over-limit fees, may have also led to unintended consequences on other price dimensions, e.g.,

introductory interest rates or annual fees. The extent of such consequences determines the 

CARD Act’s overall effects on the cost of credit card borrowing and ultimately the CARD Act’s 

effect on consumer welfare. Efforts to answer this question help identify the net effect of the Act 

for consumers and may also provide insight about what mechanisms, such as the 

competitiveness of the credit card market, led the effects of the Act to play out as they did.

The Agarwal et al. (2015) study focuses on such offsetting effects. In particular, the authors ask 

whether the CARD Act’s direct effects on some price dimensions, such as late fees and over-limit 

fee restrictions, were offset by changes in other price dimensions, and whether the overall effect 

of the Act is therefore a net decrease or increase in the cost of card credit for consumers. Again 

using a difference-in-differences regression analysis that compares general-purpose consumer 

cards with small business cards, Agarwal et al. (2015) find that the amount of such offset in 

interest rates for borrowers is on average approximately zero. The authors reject, with a high 

degree of statistical confidence, the hypothesis that any such offset for subprime consumers was 

larger than 3.7 percentage points, relative to a total estimated direct effect that saw fees decrease 

by 5.3 percentage points for this population. The authors find that even smaller offsetting effects 

can be ruled out statistically for prime accounts, although prime accounts also saw lower 

estimates of the Act’s direct effects on fee costs. However, as noted earlier, an extremely 

important caveat to this study’s empirical findings is that the pre-CARD Act period used as a 
133 BUREAU OF CONSUMER FINANCIAL PROTECTION — CONSUMER CREDIT CARD MARKET REPORT

baseline for comparison in the study’s difference-in-differences strategy may already have 

shown some of the effects of regulations similar to those in the CARD Act, if credit card issuers 

changed pricing in anticipation of potential upcoming regulatory changes.218 If, as some critics 

have argued, card issuers did change their behavior in anticipation of potential upcoming 

regulations, then Agarwal et al.’s findings would be less persuasive than otherwise presented.219

Nelson (2018) also examines the CARD Act’s overall effect on credit card pricing. While the 

results are largely consistent with the results in Agarwal et al.’s (2015), they also suggest that the 

CARD Act had a range of different effects for consumers of different types. In particular, the

study finds evidence of adverse consequences of the Act for some consumers—for example, 

some types of relatively low-risk subprime consumers may have faced higher pricing as a result 

of the Act, even as consumers at all credit scores faced, on average, lower prices. 

To estimate these differential effects across consumer types, Nelson (2018) develops a 

quantitative model of the credit card market that includes many of the features discussed in the 

preceding section’s review of theoretical research. After quantifying the importance of these 

features, such as imperfect competition and issuers’ private information, in pre-CARD Act data, 

the analysis then simulates the CARD Act’s pricing restrictions in the model and evaluates the 

restrictions’ overall effects for different types of consumers. Nelson (2018) finds that even for a 

consumer who faces higher prices after the CARD Act, there is a reasonably high chance that the 

consumer becomes, at a later date, someone who benefits from lower prices under the Act—for 

example, a consumer with only modest demand for card credit may later have more intensive 

credit demand. These consumers benefit under the Act from insurance against higher pricing in 

the future, so that on net, Nelson’s (2018) analysis finds these consumers’ surplus in fact rises as 

a result of the Act. Other consumers who do not face higher prices after the Act have even larger 

surplus gains. On average across all consumers, the study finds that consumer surplus roughly 

doubles from the CARD Act pricing restrictions. 

 

218 For further discussion of these proposed regulatory changes, see footnote 182. 

219 Agarwal et al. (2015) suggests that their empirical findings is consistent with a model in which fees are not salient 

to consumers. This behavioral model has been the focus of criticism by commentators, such as Durkin et al. (2014).
134 BUREAU OF CONSUMER FINANCIAL PROTECTION — CONSUMER CREDIT CARD MARKET REPORT

As before, it is important to caveat these conclusions. In particular, Nelson’s (2018) analysis 

relies on a specific model of credit card demand and market competition in order to understand 

how the market has responded to the CARD Act’s pricing restrictions. This model may not fully 

capture important aspects of how consumers value various credit card features. As noted earlier, 

both Nelson’s (2018) and Agarwal et al.’s (2015) analyses may also be confounded by issuers’ 

anticipatory behavior in the pre-CARD Act period, or, in Agarwal et al.’s (2015) case, by aspects 

of the Great Recession that may have affected consumer credit cards differently than small 

business credit cards during the period that the CARD Act took effect. 

Other recent research by Dou et al. (2019) examines how credit card issuers changed their 

pricing behavior after the CARD Act. Rather than focusing on the level of pricing as other 

analyses have done, Dou et al. (2019) study how credit card issuers respond differently to 

changes in their competitors’ pricing—for example, to what extent one issuer cuts its rates after 

another issuer does so. The study uses data on interest rates in direct mail offers for new credit 

card accounts, leveraging the same comparison of consumer credit cards and small business 

credit cards, before and after the CARD Act, as was used in the Agarwal et al. (2015) study. By 

examining “local” credit card markets at geographic levels such as the county, the authors 

conclude that card issuers’ pricing has become less responsive to competitors’ price changes in 

the post-CARD Act period. To interpret these results, it is valuable to note that this change in 

behavior could be consistent with credit card pricing becoming either higher or lower relative to 

cost; for example, such price responsiveness could fall in an environment where pricing has also 

fallen relative to cost. Nevertheless, these changes in pricing behavior may point to additional 

unintended consequences of the CARD Act that may shed light on the Act’s overall effects. 

CREDIT CARD AVAILABILITY

This subsection considers empirical research on the CARD Act’s overall effects on credit card 

availability. While these effects are considered separately from the pricing effects studied in the 

preceding subsection, it should be noted that the distinction between pricing effects and 

availability effects can be difficult to draw. For example, firms may respond to the restrictions 

imposed by the CARD Act by raising prices for some consumers beyond the level some 

consumers would be willing to accept or by reducing the amount of credit they offer to some 

segments by issuing lower credit lines or approving fewer applications.

In work by Han et al. (2018), the authors suggest that the CARD Act may have led to less 

frequent direct mail offers for new credit cards, in particular for consumers with subprime credit 

scores. Using an approach similar to the difference-in-differences regression framework in 
135 BUREAU OF CONSUMER FINANCIAL PROTECTION — CONSUMER CREDIT CARD MARKET REPORT

Agarwal et al. (2015), this study compares credit card offers with offers for similar loan products 

such as corporate cards, personal loans, and auto loans over time. On net, the authors estimate 

that the monthly probability of receiving a credit card direct mail offer fell by roughly 6.6 

percentage points for consumers with subprime credit scores relative to the probability of 

receiving an offer for other products and relative to prime consumers, with a discernible and 

persistent drop in the estimated relative probability of offer receipt that begins around the time 

of the CARD Act’s passage. This result is consistent with the evidence in Nelson (2018) that the 

Act may have had adverse consequences for some types of subprime consumers.

The Han et al. (2018) results are similar to what would be predicted by some of the theoretical 

arguments discussed in Section 6.2.1 above, especially theoretical arguments that assume a 

perfectly competitive credit card market. This study also has the advantage of using multiple 

comparison groups for subprime card credit and of having data from a longer pre-CARD Act 

period than has been available in many other studies, thereby mitigating the risk that 

anticipatory effects may impact the analysis. Nevertheless, similar to other studies reviewed in 

this section, some caveats also apply in interpreting the Han et al. (2018) results. As discussed in 

prior iterations of this card market report, direct mail offers for credit cards became less 

prevalent over the post-CARD Act period relative to other account acquisition channels, such as 

online marketing. If these trends were more pronounced for subprime than for prime accounts 

for reasons unrelated to the CARD Act, then such changes could affect the study’s estimates; 

similar issues could arise if comparison groups such as auto loans exhibited divergent trends 

between subprime and prime direct mail volumes in the post-CARD Act period for reasons 

particular to these markets. 

Other studies have found correlational evidence consistent with the cautionary results in Han et 

al. (2018). Jambulapati & Stavins (2014) document an increase in credit card account closures 

that coincided with both the CARD Act and the Great Recession. Santucci (2015) compares 

different vintages, or origination years, of credit card accounts from one period prior to the 

CARD Act and prior to the Great Recession, and one period subsequent to the CARD Act and 

subsequent to the Great Recession. Santucci (2015) finds that the latter vintage had lower initial 

credit lines and received smaller net increases in credit limits in dollar terms. Elliehausen & 

Hannon (2018) document that the decrease in the number of open credit card accounts during 

this time period was more pronounced for consumers with subprime credit scores. When 

discussing this correlation, Elliehausen & Hannon (2018) argue that a greater decrease in 

subprime credit in the period around the Great Recession can be interpreted as evidence of the 

CARD Act’s adverse effects. 
136 BUREAU OF CONSUMER FINANCIAL PROTECTION — CONSUMER CREDIT CARD MARKET REPORT

Agarwal et al. (2015) also examine the CARD Act’s effects on measures of credit card availability. 

Their difference-in-differences regression analysis finds that the Act resulted in small to zero 

effects on credit limits, for existing accounts, in the short term. The estimates for new accounts 

are less conclusive. For new accounts issued to consumers with subprime credit scores, the 

estimates are too statistically imprecise to be conclusive. For consumers with prime credit 

scores, the available evidence suggests that general purpose consumer cards and small business 

cards may have exhibited different trends in initial credit lines in the period prior to the Act. 

These divergent trends make estimates from the difference-in-differences strategy of comparing 

these two groups over time more difficult to interpret.

Across the methodologies and analyses reviewed in this section, a consistent theme is the 

challenge of disentangling the effects of the CARD Act itself, rather than the effects of other 

market changes such as the Great Recession. Overall, the scholarship reviewed in this section 

suggests that the CARD Act’s effect on consumer welfare is mixed. 
137 BUREAU OF CONSUMER FINANCIAL PROTECTION — CONSUMER CREDIT CARD MARKET REPORT

7. Credit card debt collection 

As part of its review of the practices of credit card issuers, the Bureau surveyed a number of 

large issuers in order to better understand practices and trends in credit card debt collection

between 2017 and 2018. These same large credit card issuers were also surveyed for the 

Bureau’s 2015 Report and 2017 Report. Findings from the Bureau’s current survey (the MMI 

dataset) are reported throughout this section.

First, this section provides background information on the overall market for consumer debt 

collection. Second, this section reviews issuer policies and practices with respect to resolving 

delinquent debt prior to charge-off, including communication practices, use of first-party and 

third-party collectors, and loss mitigation programs. Third, this section reports on the recovery 

of debt following charge-off, including metrics on recovery of charged-off debt through various 

channels, such as third-party agency collections, debt sale, and litigation. Finally, this section 

highlights selected key topics in credit card debt collection such as the growing number of 

borrowers engaging with for-profit debt settlement companies. 

7.1 Debt collection markets

Most large credit issuers use their own employees and resources to collect some portion of their 

delinquent debts. Many creditors also engage third parties to collect debts on their behalf or sell 

uncollected debts to debt buyers, who then collect the debts themselves or through a third party. 

Debt collection industry revenue has declined in recent years, decreasing from an estimated 

$13.5 billion in 2013 to $11.5 billion in 2018.220 The third-party debt collection industry now 

employs roughly 118,000 workers, representing an overall reduction of nearly 10,000 jobs in the 

last three years.221 The number of debt collection firms has also continued to decline as the 

result of industry consolidation, as can be seen in Figure 1. 

 

220 Anna Amir, Debt Collection Agencies in the US, IBISWorld (Dec. 2018). 

221 Id. 
138 BUREAU OF CONSUMER FINANCIAL PROTECTION — CONSUMER CREDIT CARD MARKET REPORT

DEBT COLLECTION INDUSTRY SHRINKAGE BY ENTERPRISES AND ESTABLISHMENTS, 2010-

2018 (IBISWORLD)222

According to a nationally representative survey conducted by the Bureau between December 

2014 and March 2015, one-in-three consumers with a credit report reported having been 

contacted by a debt collector or creditor about a past-due debt in the preceding year. Forty-four

percent of these consumers reported being contacted about a credit card debt.223

More recent data drawn from the CCP224 indicate that in 2018 roughly 28 percent of consumers 

with a credit file had a “collections tradeline” (i.e., an account that appears on a consumer’s 

credit report as a debt in collections) listed for a debt assigned to a third-party collector. Of these 

 

222 “Enterprises” refers to the number of debt collection businesses in operation. Each enterprise may have multiple 

locations, which explains why “establishments” is a larger figure.

223 Bureau of Consumer Fin. Prot., Consumer Experiences with Debt Collection: Findings from the CFPB’s Survey on 

Consumer Views on Debt, (Jan. 12, 2017), 

https://www.consumerfinance.gov/documents/2251/201701_cfpb_Debt-Collection-Survey-Report.pdf. The total 

number of consumers with accounts in collection may be understated because it is based on consumer credit 

reports, which do not account for utilities, rent, retail, and other debts that are not reported to the three large credit 

reporting agencies. See, e.g., Bureau of Consumer Fin. Prot., Key Dimensions and Processes in the U.S. Credit 

Reporting System: A Review of How the Nation’s Largest Credit Bureaus Manage Consumer Data, (Dec. 2012), 

available at https://www.consumer finance.gov/ data-research/research-reports/key-dimensions-and-processesin-the-u-s-credit-reporting-system. 

224 See Section 1.3.1 for more information on the CCP data source. 

2010 2011 2012 2013 2014 2015 2016 2017 2018

7,000

8,000

9,000

10,000

11,000

Establishments Enterprises
139 BUREAU OF CONSUMER FINANCIAL PROTECTION — CONSUMER CREDIT CARD MARKET REPORT

consumers, roughly 30 percent had at least one credit card tradeline assigned to a third-party 

debt collector. However, the actual share of consumers with credit card debt in collections may 

be much higher, as issuers may provide credit reporting data on delinquent consumers directly 

to credit bureaus rather than allowing their third-party collection agencies to furnish these 

tradelines. 

Consistent with the Bureau’s 2017 Report, debt from the financial services segment continues to 

constitute the largest share of third-party debt collection revenue—nearly 37 percent in 2018.225

Figure 2 breaks down the $11.5 billion in third-party debt collection revenue by type of debt. 

Telecommunications, medical, retail, and government debt are also significant drivers of debt 

collection industry revenue. 

DEBT COLLECTION MARKET SEGMENTS BY SHARE OF REVENUE, 2018 (IBISWORLD)

A large majority of debt collection industry revenue is generated by firms contracting with 

creditors to collect their debts on a contingency fee basis. In contingency fee collections, the 

creditor and the collector each receive a share of the amount collected. The Bureau’s current 

survey on credit card issuers’ debt collection practices found that, on average, respondents 

placed 28 percent of their overall charged-off inventory with third-party collectors in 2018, with 

almost all employing a contingency fee model.

 

225 2017 Report, supra note 5, at 305. 

Government

0% 5% 10% 15% 20% 25% 30% 35% 40%

Retail and commercial

Healthcare

Other

Telecommunications

Financial services
140 BUREAU OF CONSUMER FINANCIAL PROTECTION — CONSUMER CREDIT CARD MARKET REPORT

Another significant source of debt collection revenue is debt sales, where a debt buyer purchases 

accounts (or portfolios of accounts) from the original creditor or other debt buyers and then 

generally seeks to collect on the debt, either themselves or through third-party debt collectors. If 

debt buyers have used third-party debt collectors to recover for them, the debt buyers typically 

pay a share of the amount collected to the third-party debt collectors. 

In May 2019, the Bureau published a Notice of Proposed Rulemaking (NPRM) proposing to 

amend Regulation F, 12 C.F.R. part 1006, which implements the Fair Debt Collection Practices 

Act (FDCPA), to prescribe Federal rules governing the activities of debt collectors covered by the 

FDCPA.226 The proposal focuses on debt collection communications and disclosures and also 

addresses related practices by debt collectors.

7.2 Collections prior to charge-off

This section begins with a review of surveyed issuers’ policies, procedures, and practices with 

respect to resolving delinquent debt prior to charge-off. All respondents conducted some 

collections activities in-house prior to charge-off. An issuer’s internal collection efforts may 

include such methods as calling, texting, emailing, and sending letters to the consumer. Most

issuers also supplemented the activities of their in-house agents with the resources of first-party 

collectors: outside collectors who collect on delinquent debt while working under the name and 

the direction of the creditor. As an alternative to internal collection and recovery, an issuer may

also turn to a third-party agency to collect in the agency’s own name. More than one-half of the 

surveyed issuers worked with third-party collectors prior to charge-off.

In response to the Bureau’s current survey, issuers provided information regarding restrictions 

on contacting consumers, use of electronic communications (e.g., email or SMS), technology 

and software used as part of their collection strategies, use of first-party collectors, loss 

 

226 Debt Collection Practices (Regulation F), 84 Fed. Reg. 23274 (May 21, 2019) (a proposed rule to amend 12 C.F.R. 

part 1006).
141 BUREAU OF CONSUMER FINANCIAL PROTECTION — CONSUMER CREDIT CARD MARKET REPORT

mitigation practices, and the engagement of third-party collectors for collection activities prior 

to charge-off.227

7.2.1 Pre-charge-off communications

Issuers reported having policies in place that specify the frequency with which their collectors 

can call, leave voicemails, email, text, and otherwise contact a consumer with regard to a 

delinquent account.228 Table 1 below provides greater specificity on the ranges of issuers’ policy 

limits on consumer contact via various media and actual average attempts for each of those 

media. Issuers reported that their call intensity strategies depended on an account’s stage of 

delinquency and risk level, among other factors. 

TABLE 1: RANGES OF CONSUMER CONTACT POLICY LIMITS AND ACTUAL AVERAGE ATTEMPTS (MMI)

Policy limit or 

actual attempts

Phone call 

attempts per 

day 

Phone calls 

after right party 

contact

Voicemails per 

day

Postal letters 

per month

Policy limit 2 to 9 per

account

No additional 

calls on contact 

date

1 per phone 

number

1 to 8 per 

account

Actual average 

attempts229

1.42 to 3.50 per 

account

0 per account on 

contact date

0.06 to 0.77 per 

account

0.21 to 2.16 per

account

 

227 Most issuers use proprietary case management software for their internal collections. Issuers rely on a small

number of vendors for their dialer software and hardware, mainly Avaya and Aspect dialers.

228 In response to the Bureau’s Request for Information (RFI) a commenter asserted that limiting consumer contacts 

via any channel will make it more challenging for creditors to work with delinquent consumers, raising the cost of 

credit overall, including for consumers who pay their debts in a timely manner. See ABA Comment Letter, at 7. 

229 Average attempts via the telephone and voicemail channels were defined as the number of calls made or 

voicemails left to all accounts that were called divided by the number of unique delinquent accounts that were called 

in a given period of time. For postal letters sent, average attempts by letter was defined as the number of letters sent 

to delinquent accounts divided by the number of unique delinquent accounts. The time frames were daily, weekly, 

or monthly, depending on common practices in that channel.
142 BUREAU OF CONSUMER FINANCIAL PROTECTION — CONSUMER CREDIT CARD MARKET REPORT

All surveyed issuers reported that their policies included daily caps per account on phone calls. 

Daily contact attempt policy limits ranged from two calls to nine calls per account. The high end 

of this range has decreased from the previous high of 15 calls per account reported in the 

Bureau’s 2017 Report.230 Some respondents also set a weekly cap on telephone call attempts at 

30 calls per week per account, while other issuers set monthly caps, which ranged from 60 to 90 

call attempts per month. All issuers surveyed restricted the number of voicemails that can be left 

for a consumer each day, allowing no more than one voicemail per phone number per day, a 

decrease from the policy range of one to two voicemails reported in the Bureau’s 2017 Report.231

In general, issuers’ actual average contact attempts remained below stated policy maximums. 

Issuers averaged between 1.42 and 3.50 contact attempts via telephone per account per day, 

similar to the range of 1.49 to 3.51 contact attempts reported in the Bureau’s 2017 Report.

However, no issuer allowed calls to continue within a given day once “right party contact” has 

been made. Right party contact occurs when the issuer or collector is able to reach and speak 

with the consumer whom the issuer believes is responsible for the debt via telephone. Right 

party contact rates typically averaged between 1 percent and 5 percent for in-house and firstparty collections and between o.6 percent and 1 percent for third-party collections over a three 

month period.232 The majority of respondents reported that they did not track in-house and 

first-party contact attempts separately for pre-charge-off collections. Issuers who placed precharge-off accounts with third-party collection agencies stated that they often assign “high risk” 

accounts to third-party collectors, including accounts where no contact had been made with the 

primary account owner for an extended period of time, reducing right-party contact rates. 

Nearly all of the issuers surveyed also reported using email as part of their credit card collection 

strategy, but the degree to which they used it varied widely. The reported percentage of email-

 

230 2017 Report, supra note 5, at 314.

231 Id.

232 The survey defined “right party contact rate” as the number of times live contact with the primary or joint account 

holder or power of attorney of the debt was made during the quarter divided by the total number of outbound dialer 

attempts made to delinquent accounts in the quarter. 
143 BUREAU OF CONSUMER FINANCIAL PROTECTION — CONSUMER CREDIT CARD MARKET REPORT

eligible accounts (defined as accounts for which the consumer provided a valid email address 

and agreed to be contacted at that address) ranged from 10.3 to 92.6 percent. Some issuers 

reported using email proactively for account servicing (e.g., sending reminders about a pending 

withdrawal from a consumer’s bank account for a recurring payment) as part of their precharge-off communication strategy. Other issuers stated that they used email only reactively, 

such as when a consumer initiated a conversation online or requested that documents be sent by 

email. Issuers who reported using email typically restricted the number of emails that could be 

sent to two or three emails per week. 

TABLE 2: EMAIL, TEXT, AND WEBCHAT ELIGIBILITY AND ENGAGEMENT RATES, 2018 (MMI)

Email Text/SMS message Web chat

Average percent of 

accounts eligible for 

channel233

68.3% 59.4% Not applicable

Average percent of 

eligible accounts 

engaged via channel 

per month

67.0% 50.6% 2.5%

While nearly all issuers reported using email, less than two-thirds of those surveyed said they 

sent mobile text messages to communicate with delinquent consumers. However, the share of 

issuers using text as part of their credit card collection strategy has increased since the Bureau’s 

2017 Report as a number of issuers reported piloting pre-charge-off text message strategies to 

notify consumers of their delinquent credit cards and repayment options. Two-thirds of issuers 

surveyed also reported engaging with delinquent consumers via “web chat,” where a consumer 

can click a chat button on the issuer’s webpage to communicate about their debt with a 

collections agent. In fact, some issuers now allow credit card settlements to be negotiated via 

web chat. 

 

233 For email and text, the eligibility rate was defined as total number of unique delinquent accounts with a consented 

email address or a consented mobile phone number divided by the total number of unique delinquent accounts as of 

the end of each year. There is no eligibility rate for web chat, as the eligible population is all unique pre-charge-off 

delinquent accounts. 
144 BUREAU OF CONSUMER FINANCIAL PROTECTION — CONSUMER CREDIT CARD MARKET REPORT

All surveyed credit card issuers had the capacity, within their collections function, to 

accommodate consumers with Limited English Proficiency or consumers who express the desire 

to communicate in a language other than English. Some issuers had a special unit of 

multilingual collectors to communicate with these consumers in their preferred language. Those 

without a special unit outsourced their translation services. For issuers that tracked consumer 

language preferences, the share of pre-charge-off delinquent balances owed by consumers who 

expressed a preference for a language other than English was 2.35 percent in 2018. 

Some issuers reported having pre-delinquent collections strategies in place where they pursued 

collections on accounts that were current (i.e., had not yet become delinquent.) These issuers 

focused on subsets of current accounts that were identified as high-risk, such as accounts that 

were chronically above the credit limit. 

7.2.2 First-party collections

The majority of issuers supplemented the activities of their in-house agents with resources from 

first-party collectors, either by directly engaging an entire first-party collection agency or by 

supplementing their internal agent pool by hiring some collectors from first-party suppliers. 

Issuers reported that they generally do not track pre-charge-off account placements separately 

between in-house and first-party collections. Most issuers that used first-party collectors noted 

that they do not place any specific sub-segments of accounts with first-party agencies. Instead, 

issuers typically allocated work between in-house and first-party collectors based on availability, 

requiring that first-party collectors place, receive, and document calls to consumers using the 

issuers’ own case management system and dialer technology. 

First-party collection companies were typically paid on a full-time equivalent (FTE) basis, unlike 

the contingency fee model used to compensate third-party collectors. On average, issuers 

reported keeping 89 percent of pre-charge-off debt balances to be worked in-house and by firstparty collectors, with the remaining 11 percent placed with third-party collectors.234 The number 

of unique first-party agencies used across issuers remained relatively stable year-over-year 

 

234 These figures represent the percentage of pre-charge-off balances that each issuer retained for in-house and firstparty collections and placed with third-party collectors, averaged across all issuers. 
145 BUREAU OF CONSUMER FINANCIAL PROTECTION — CONSUMER CREDIT CARD MARKET REPORT

between 2017 and 2018, with 10 unique agencies in 2017 and 11 in 2018. The issuers that used 

first-party agencies used three different agencies on average. 

7.2.3 Third-party contingency collections

More than half of the surveyed issuers worked with third-party contingency collectors prior to 

charge-off, which remained the same compared to the Bureau’s 2017 Report.235 The total 

number of unique third-party collection agencies used across issuers also remained steady from 

2017 to 2018, with issuers who used third-party collectors employing an average of 13 thirdparty agencies in both years.236 For issuers that used third-party collection agencies prior to 

charge-off, the average share of pre-charge-off debt placed with third-party collectors remained 

flat at 11 percent between 2017 and 2018. However, the share of pre-charge-off debt placed with 

third-party agencies varied widely among issuers, as some issuers placed a substantial portion 

(as high as 28 percent) of their pre-charge-off debt with third-party collectors, while some did 

not place any debt. 

AGENCY COMPENSATION

Most issuers that contracted with third-party agencies for pre-charge-off collections paid a 

contingency fee that was a percentage of the amount collected. These fees ranged from 7.1 to 

19.0 percent, with an average of 16.5 percent in 2017 and 15.3 percent in 2018. Survey 

respondents indicated that this variation is attributable to differences in the risk profile of the 

accounts being placed with third-party collectors. Generally, highly-collectible accounts 

command lower contingency fees compared to those perceived as being more difficult to collect. 

Among those issuers that used third-party agencies, a small number reported paying their thirdparty collectors on a FTE basis, rather than using contingency fees. Most issuers also provided 

additional incentives to third-party collectors based on their performance relative to a set 

financial target or to the performance of other collection agencies. 

 

235 2017 Report, supra note 5, at 315.

236 These numbers were driven by one outlying issuer, who reported a significantly higher number of third-party 

collection agencies. Excluding this outlying issuer, the average number of third-party collection agencies used by 

each surveyed issuer was 10. 
146 BUREAU OF CONSUMER FINANCIAL PROTECTION — CONSUMER CREDIT CARD MARKET REPORT

7.2.4 Performance

Prior to charge-off, issuers generally kept debts that were in an early stage of delinquency or 

were assessed as having a relatively high likelihood of recovery for in-house collections. Issuers 

that placed accounts with third-party collection agencies often assigned “high risk” accounts to 

third-party collectors, including accounts in the later stages of delinquency, closed accounts, and 

accounts where no contact had been made with the primary account owner for an extended 

period of time. Respondents also noted that they may assign accounts with special 

circumstances to third-party collection agencies with specialized collections expertise in the 

relevant area, such as those where the consumer was engaged with debt settlement companies, 

the accountholder was deceased, or bankruptcy applications were pending. As a result, in-house 

collections generally had higher liquidation rates and cure rates, and lower charge-off-rates, 

relative to third-party collections, as seen in Figure 3 below.237 These performance metrics all 

remained relatively stable year-over-year from 2017 and 2018.

 

237 The quarterly liquidation rate is defined as total pre-charge-off delinquent dollars collected in a given quarter as a 

percent of total pre-charge-off delinquent dollars in that same quarter. Cure rate is defined as the percent of precharge-off delinquent dollars in a given quarter that were repaid to current status by the end of the same quarter. 

Charge-off rate is defined as the percent of pre-charge-off delinquent dollars that charged off (representing 

contractual charge-offs as well as accounts charged off for bankruptcy, notice of decease, etc.) as of the end of the 

same quarter. These quarterly rates are averaged across all issuers and weighted by issuer’s share of total precharge-off delinquent dollars. Finally, the 2018 quarterly average was calculated across all four quarters.
147 BUREAU OF CONSUMER FINANCIAL PROTECTION — CONSUMER CREDIT CARD MARKET REPORT

AVERAGE QUARTERLY PERFORMANCE FOR INTERNAL AND THIRD-PARTY COLLECTIONS, 

2018 (MMI)

 

7.2.5 Loss mitigation and re-aging practices

Credit card issuers used various loss mitigation practices, including re-aging, short- and longterm forbearance programs, debt management plans offered by consumer credit counseling 

agencies, and debt settlement. Issuers reported that they generally structured their loss 

mitigation practices to conform to guidance issued by the Federal Financial Institutions 

Examination Council (FFIEC) and the federal banking agencies on the use of these collections 

tools.238

RE-AGING

Re-aging returns a delinquent, open-end credit card account to current status without collecting 

the total amount of principal, interest, and fees that are contractually due. Re-ages are often 

 

238 See generally Uniform Retail Credit Classification and Account Management Policy: Policy Implementation, 65 

Fed. Reg. 36903 (June 12, 2000); Off. of the Comptroller of the Currency, Bd. of Govs. of the Fed. Reserve System, 

Fed. Deposit Ins. Corp., Off. of Thrift Supervision, Credit Card Lending: Account Management and Loss Allowance 

Guidance, OCC Bulletin 2003-1, (Jan. 8, 2003), available at https://occ.gov/newsissuances/bulletins/2003/bulletin-2003-1.html.

Liquidation rate Cure rate Charge-off rate

0%

10%

20%

30%

40%

50%

60%

Internal Third-party
148 BUREAU OF CONSUMER FINANCIAL PROTECTION — CONSUMER CREDIT CARD MARKET REPORT

performed by collections departments to assist customers who are experiencing temporary 

financial difficulties. 

Issuers’ policies allow re-aging of open-end accounts when a borrower makes at least three 

consecutive minimum monthly payments or an equivalent amount in a lump-sum payment. 

Additionally, an account must be on the books for at least nine months to be eligible for reaging. The number of re-ages on an account is limited to one in 12 months and two in five years. 

However an account that is enrolled in a long-term forbearance or debt management program, 

including internal and third-party debt management plans, may be eligible for a third re-age 

within the five year period. All surveyed issuers’ re-aging policies aligned with the guidance 

offered by the FFIEC and federal banking agencies.239

According to the results of the current survey, re-aged balances as a percentage of total 

delinquent dollars remained below 2 percent for each quarter between 2017 and 2018. There 

was considerable variation among the card issuers in terms of the share of pre-charge-off 

balances that were re-aged: the quarterly average ranged from as low as 0.44 percent of total 

delinquent dollars to a maximum of 5.8 percent. This wide range may reflect variation in each 

issuer’s underlying portfolio composition. Collectively, issuers re-aged nearly $1 billion in 

balances per quarter, well above the $660 million per quarter reported in the Bureau’s 2017 

Report. However, re-aged balances as a share of total delinquent dollars still remained close to 

the 2 percent reported in the Bureau’s 2017 Report.240 An uptick in re-aged balances in recent 

quarters in 2018 aligned with an increase in credit card delinquencies. 

FORBEARANCE PROGRAMS

Forbearance programs are a form of workout program designed to assist borrowers 

experiencing financial hardship. These programs can be “temporary” or “short-term,” aimed at 

assisting borrowers experiencing hardships expected to last 12 or fewer months, or “long-term,”

intended to aid borrowers experiencing continued hardships lasting longer than 12 months. 

Forbearance programs usually lower a customer’s interest rate and monthly required payment 

amount. Issuers reported that their long-term programs generally require borrowers to repay 

 

239 65 Fed. Reg. 36903 (June 12, 2000).

240 2017 Report, supra note 5, at 318. 
149 BUREAU OF CONSUMER FINANCIAL PROTECTION — CONSUMER CREDIT CARD MARKET REPORT

their credit card debt within 60 months. In order to meet this amortization timeframe, creditors 

may need to substantially reduce interest rates and eliminate fees, so that a greater share of the 

borrower’s monthly payment is applied to pay down the principal balance. All issuers surveyed 

generally reported assessing and documenting the reason, severity, and duration of the 

cardholder’s financial difficulty when placing them in a forbearance program. All surveyed 

issuers’ forbearance policies aligned with the guidance offered by the FFIEC and federal banking 

agencies.241

QUARTERLY FORBEARANCE NEW ENROLLMENT AND ACTIVE INVENTORY AS A SHARE OF 

DELINQUENT BALANCES (MMI)242

241 Id.

242 “Inventory” refers to total balances for all accounts that are in active status in a forbearance program as of the end 

of the quarter. 

Review of issuers’ loss mitigation policies indicates that most issuers have discontinued offering 

short-term forbearance programs over the last several years. Instead, issuers that did not offer 

short-term programs evaluated consumers with short-term financial hardships and offered 

them long-term programs as an alternative. Most issuers also reported that they do not allow 

their third-party collection agencies to offer and enroll borrowers in hardship programs, due to 

the complexity of managing these programs. 

 

0%

3%

6%

9%

12%

2017Q1 2017Q2 2017Q3 2017Q4 2018Q1 2018Q2 2018Q3 2018Q4

Enrollment Inventory
150 BUREAU OF CONSUMER FINANCIAL PROTECTION — CONSUMER CREDIT CARD MARKET REPORT

CREDIT COUNSELING AGENCIES

Issuers work with consumer credit counseling agencies (CCAs) to help borrowers resolve their 

financial hardships, as an additional component of their loss mitigation efforts. CCAs work with 

borrowers to develop a budget and a debt management plan (DMP) for all of the consumer’s 

enrolled debts, which may be owed to multiple creditors. These plans generally involve paying 

creditors a fixed payment amount at a reduced interest rate. Issuers typically categorize DMPs 

managed by CCAs as “long-term hardship programs.” 

All of the respondents reported that they work with CCAs in some capacity, although individual 

creditors’ policies about how they work with and fund CCA services vary. Some respondents 

limited the number of CCAs they work with by requiring CCAs to meet certain selection criteria, 

such as whether CCAs are non-profits, belong to a trade group, or meet certain criteria for 

program outcomes. Some respondents reported referring consumers to specific CCAs. The 

majority of respondents reported funding CCAs through a “fair share” payment, which is a 

payment based on a percentage of the amount the consumer has paid back to the issuer. A few of 

the respondents stated that they do not pay fair share, but instead fund certain CCAs through 

grant funding. Several issuers reported exploring working with CCAs on debt relief programs 

that extend beyond the traditional DMP. 

All issuers reported offering one or more types of forbearance or debt management programs 

with varying interest rates, monthly fixed payment amounts, and amortization periods. Total 

new enrollments in forbearance programs and DMPs offered by credit counselors remained 

below 2 percent of total pre-charge-off delinquent balances during the study period. However, 

total new enrollments increased by 16 percent from 2017 to 2018, representing a $500 million 

dollar increase in debt balances enrolled. Approximately $1.2 billion of debt was enrolled in 

various forbearance or debt management programs each quarter. The average quarterly new 

enrollment rate among individual issuers ranged from a low of 0.2 percent to a high of 5.2 

percent of all pre-charge-off delinquent balances. While the Bureau’s 2017 Report noted a steady 

decline in forbearance inventory between 2015 and 2016, issuers reported that total forbearance 

inventory shows a moderate upward trend due to an increasing number of new enrollments in 

2018. 

DEBT SETTLEMENT

Debt settlements occur when an issuer agrees to accept less than the full balance owed by the 

borrower as full satisfaction of the balance owed. This can happen when the creditor becomes 

persuaded that the consumer is unable to pay the full amount of the debt owed. Collectors may 
151 BUREAU OF CONSUMER FINANCIAL PROTECTION — CONSUMER CREDIT CARD MARKET REPORT

also offer settlements to the consumer, as authorized by the creditor. Under current tax law, 

debt cancelled in this manner may have tax implications for the consumer.

Creditors’ settlement policies outline the standards for settlement offers that the creditors will 

proactively make or reactively accept from consumers. Most issuers have policies in place to 

proactively offer settlements directly to consumers who meet the standardized risk criteria set 

by the creditor. These efforts may be conducted via in-house operations or through third parties. 

Issuers also set “floors” for settlements requested by the consumer, which specify the lowest 

amount the issuer is willing to accept as a settlement as a percent of the total balance. In 

addition to the size of the debt and the length of delinquency, issuers generally have procedures 

in place to assess the financial situation of the consumer when responding to a settlement 

request by the consumer. While there is some variation among issuers, the share of debt that 

each issuer settled for less than the full balance remained fairly steady throughout 2017 and 

2018. Among surveyed issuers, the average share of pre-charge-off debt settled each quarter 

ranged from 0.07 percent to 0.79 percent, while the share of post-charge-off debt settled ranged 

from 0.26 percent to 3.04 percent. 

Pre-charge-off balances are settled with a single lump-sum payment or multiple installments. 

Installment settlements typically consist of three payments, but pursuant to guidance from the 

Office of the Comptroller of the Currency for national banks and federal savings associations the 

total duration of the payments should not exceed three months.243 The portion of the balance 

that is forgiven should generally be charged off when the settlement agreement is fulfilled.244

Post-charge-off settlements can be structured over any length of time. Post-charge-off 

settlements can have lower floors relative to pre-charge-off settlements, though the degree to 

which lower rates are offered for charged-off debts varies across issuers. Average settlement 

rates—the balance paid as a ratio of the balance owed by the borrower for accounts that were 

settled—remained steady between 2017 and 2018 at about 53 percent pre-charge-off and 50 

 

243 See Off. of the Comptroller of the Currency, Comptroller’s Handbook: Credit Card Lending, Version 1.2, (Jan. 

2017), available at https://www.occ.treas.gov/publications/publications-by-type/comptrollers-handbook/creditcard-lending/pub-ch-credit-card.pdf. 

244 See OCC et al. Guidance, supra note 238. 
152 BUREAU OF CONSUMER FINANCIAL PROTECTION — CONSUMER CREDIT CARD MARKET REPORT

percent post-charge-off, though there was some variation in the rates among individual 

respondents. 

If the forgiven debt exceeds $600, issuers may file a 1099-C for “Cancellation of Debt” with the 

Internal Revenue Service. Most issuers disclose the potential of tax implications for the 

settlement to the consumer, either as part of a telephone script or via letter. 

7.3 Recovery following charge-off

Once an account charges off, it is placed into one of a variety of channels, including internal 

collections, third-party agency placement, litigation, and debt sale to facilitate further recovery 

of the balance owed. Issuers may place accounts multiple times in different channels depending 

upon recovery performance within each channel. Issuers may also warehouse certain accounts 

where balances are considered unlikely to be repaid.245 In 2018, issuers in the sample charged 

off $39 billion in debt, a 10 percent increase from 2017, and 56 percent more than the $25 

billion charged off in 2015.246 In general, the current survey found that: 

 All issuers warehoused a significant portion of their overall post-charge-off inventory;

 Most issuers used third-party agencies throughout the entire review period to collect at 

least a portion of their charged-off debt;

 Most issuers engaged in internal collections for at least a portion of their charged-off 

debt;

 Most issuers engaged in post-charge-off litigation to collect debt from consumers; and

 

245 Warehoused balances are generally those that issuers do not actively seek to collect and generally include accounts 

issuers considered to be uncollectible or unlikely to be repaid, including older accounts that may be past the statute 

of limitations. Some issuers also reported that they may place accounts in warehouse status when transitioning 

these accounts between placements.

246 2017 Report, supra note 5, at 320. The same group of issuers were surveyed for the Bureau’s previous 2017 and 

2015 Reports. 
153 BUREAU OF CONSUMER FINANCIAL PROTECTION — CONSUMER CREDIT CARD MARKET REPORT

 A minority of issuers sold debt.

SHARE OF CHARGE-OFF BALANCE INVENTORY BY RECOVERY CHANNEL IN 2017 AND 2018 

(MMI)247

Issuers reported a significant portion of their overall post-charge-off balance inventory was in 

warehouse status, as shown in Figure 5. The warehouse category includes accounts that are 

considered uncollectible for various reasons (e.g., accounts lacking current contact information 

for the accountholder despite many attempts to locate them) or that are deemed unlikely to be 

repaid (e.g., accounts where no payment has been received for an extended length of time).

Excluding warehoused accounts, issuers that used third-party collection agencies generally 

placed the largest share of their charged-off balance inventory with such agencies. Issuers that 

used third-party collection agencies reported placing nearly one-third of their post-charge-off 

inventory with third-party agencies in any given quarter between 2017 and 2018. While there 

was significant variation in third-party placements among issuers, the percentage of debt that 

each issuer placed with third-party agencies remained fairly consistent between 2017 and 2018. 

Among issuers, third-party placement share ranged from nearly 8 percent to 73 percent of an 

issuer’s total post-charge-off inventory in 2017 or 2018. The range of placement into internal 

 

247 Green bars represent the average share of charged-off balances in each of the five recovery channels. The issuers 

provided the status of post-charge-off balance inventory as of the end of each quarter in 2017 and 2018. The 

distributions for 2017 and 2018 were averaged by issuer, and then averaged across issuers. Black lines running 

through each bar represent the range of the share of charged-off balances only for issuers that used that channel. In 

other words, the ranges do not include zero values, even though some issuers did not use that particular channel.

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Sale

Litigation

Internal

Third-party

Warehousing
154 BUREAU OF CONSUMER FINANCIAL PROTECTION — CONSUMER CREDIT CARD MARKET REPORT

recovery was similarly varied, as a few issuers reported that they relied primarily on internal 

recovery for post-charge-off collections. 

Most issuers sued some consumers to recover unpaid balances after charge-off. On average, 

issuers litigated almost 20 percent of their post-charge-off balance inventory. Finally, similar to 

the results of the Bureau’s 2015 and 2017 Reports, few issuers leveraged debt sales as part of 

their post-charge-off recovery strategy. Issuers who sold debt reported selling an average of 12 

percent of their post-charge-off balance inventory. 

7.3.1 Internal recovery 

Internal recovery is not a significant piece of most issuers’ overall recovery strategy for postcharge-off debt. Similar to in-house collections prior to charge-off, issuers may pursue internal 

recovery efforts directly after charge-off, or they may first place accounts with third-party 

contingency agencies. A minority of the issuers used internal recovery as a significant piece of 

their overall recovery strategy, while the majority generally retained accounts that were 

ineligible for third-party placement or awaiting placement in another channel. There was a 

significant degree of variation in issuers’ policies designating certain accounts ineligible for 

third-party placement. Some issuers use models that score accounts based on the likelihood of 

payment to subset accounts to place in internal recovery, while some do not allow accounts with 

certain statuses (i.e., accounts of consumers who are currently on active military duty) to be 

placed with third-party agencies. While on average about 22 percent of an issuer’s post-chargeoff inventory was pursued through internal recovery in 2017 and 2018, one issuer chose to retain 

and internally recover more than 80 percent of its post-charge-off inventory during the review 

period. 

7.3.2 Third-party recovery 

Most issuers employed third-party agencies to recover post-charge-off debt, all on a 

contingency-fee basis. While most surveyed issuers placed between 20 percent and 40 percent 

of their charged-off balances with third-party collectors, one issuer did not place any charged-off 

debt with third-party contingency agencies for most of 2017 and 2018. Issuers described a 

number of reasons for placing charged-off debt with third-party agencies, including improved 

recoverability for certain “high-risk” accounts, internal resource constraints, and the need for 

specialized expertise in recovering certain “special segments” of debt (e.g., debt owed by 

deceased consumers).
155 BUREAU OF CONSUMER FINANCIAL PROTECTION — CONSUMER CREDIT CARD MARKET REPORT

Creditors who employ third-party collectors generally contract with agencies to pursue a 

portfolio of accounts for a certain length of time. If an agency cannot recover money or establish 

contact on an account in the specified period, the creditor will generally recall the account. 

Accounts may be recalled from a third-party placement at any time, but recall usually follows a 

prescribed schedule determined by the age of the debt and the number of previous account 

placements. 

PERFORMANCE 

Performance of recovery is measured by the “cumulative recovery rate,” which is the share of the 

charged-off balance that has been recovered over the life of the charged-off account. Recovery 

on charged-off debt can occur over several months or years. As the debt ages and the account 

moves from one placement to another, the amount of money the issuer expects to recover from 

that account generally decreases.

Figure 6 below shows the average cumulative recovery rates for balances that charged off each 

quarter between the first quarter of 2017 and the fourth quarter of 2018. These rates reflect the 

cumulative recovery on the debt across all potential placement channels, including internal 

placement, third-party agency placement, litigation, and proceeds from debt sales. Longer 

recovery periods mean that the issuers have had more time to collect on the debt, so the 

cumulative recovery rate rises over time. 
156 BUREAU OF CONSUMER FINANCIAL PROTECTION — CONSUMER CREDIT CARD MARKET REPORT

CUMULATIVE RECOVERY RATES FOR QUARTERLY VINTAGES BY MONTHS FOLLOWING 

CHARGE-OFF (MMI)248

For debt that charged off in the first quarter of 2017, issuers recovered an average of 12 percent 

of the charged-off balance within a two-year period. Nearly two-thirds of this recovery occurred 

within the first year following charge-off. Quarterly vintages show stable performance over the 

two year review period. The first vintage for which there are 24 months of data is 2017Q1. After 

one year, issuers recovered 7.5 percent of the charged-off balances from this vintage. As debt 

ages, incremental gains in recovery decline. After the second year, issuers recovered an 

additional 4.4 percent, for a two-year total of 11.9 percent.

THIRD PARTY NETWORKS

The size of individual issuers’ third-party vendor networks, which include both contingency 

agencies and law firms, was generally stable between 2017 and 2018. The overall number of 

unique vendors used across all issuers was 119 in both years. In 2018, all but one of the issuers’ 

third-party vendor networks consisted of at least eight third-party vendors. Between 2017 and 

2018, the largest single network employed by any surveyed issuer included 57 separate vendors. 

While no single vendor was used by all issuers, three were used by the majority. 

 

248 Here, each “quarterly vintage” represents balances for all accounts that charged off at any time during the given 

quarter. Cumulative recovery includes all proceeds collected post-charge-off, including through third-party 

collections, litigation, and debt sales.

3 6 9 12 15 18 21 24

0%

2%

4%

6%

8%

10%

12%

2017Q1 2017Q2 2017Q3 2017Q4

2018Q1 2018Q2 2018Q3 2018Q4
157 BUREAU OF CONSUMER FINANCIAL PROTECTION — CONSUMER CREDIT CARD MARKET REPORT

AGENCY COMPENSATION

Issuers who used third-party agencies to collect on post-charge-off debt typically paid a 

contingency fee that was a percentage of the amount of debt collected. Contingency fees are 

based on the level of placement (e.g., primary, secondary, tertiary, and quaternary), with later 

placements typically receiving higher contingency fees as the debt ages and recovery becomes 

more difficult. In 2018, contingency fees ranged from 18 to 26 percent for primary placement, 

from 22 to 34 percent for secondary placement, from 26 to 44 percent for tertiary placement, 

and from 10 to 50 percent for quaternary placement. Some issuers reported higher contingency 

fees for tertiary placement than quaternary placement. These respondents noted that the 

volume of quaternary placements is generally low and includes only a select subset of accounts 

(e.g., accounts that had previously broken from a payment plan) where some likelihood of 

collection remains. After quaternary placement, most issuers report that they recall accounts 

and place them in warehouse status, where no further collection activity typically occurs. 

In addition to contingency fees, some issuers set incentives and penalties to encourage thirdparty agencies to meet performance targets. A minority of issuers reported that they offered 

incentives to reward agencies with superior performance relative to other agencies in the 

issuer’s network. Some issuers reported that they rewarded their third-party collection agencies 

with additional bonuses for meeting hiring and retention goals. Many issuers’ third-party agency 

compensation plans also contained a penalty component, where agencies could be penalized if 

they fell significantly behind their peers’ average performance or had compliance problems. 

Penalties included reduced contingency fees and/or placements in future periods, exclusion 

from bonus consideration, increased frequency of audits, and termination for significant 

compliance violations. 

VENDOR MANAGEMENT

Issuers manage their third-party vendors’ compliance with the issuers’ policies, procedures, 

applicable regulatory requirements, and financial performance targets using a variety of 

methods. These included: 

 Monitoring of randomly-sampled collection calls on a periodic (e.g., monthly) basis;

 Periodic (e.g., semi-annual or annual) audits, including on-site visits;

 Direct engagement through a team that serves as the primary contact between issuer and 

vendor to provide oversight of day-to-day operations; and 
158 BUREAU OF CONSUMER FINANCIAL PROTECTION — CONSUMER CREDIT CARD MARKET REPORT

 Complaint intake, tracking, investigation, resolution, and trend analysis. 

All issuers have limits on consumer contact attempts that they extend to their third-party 

contingency agencies and monitor through quality assurance testing, routine audits, and call 

sampling. These limits are generally similar to the ones followed by issuers’ in-house and firstparty collectors in pre-charge-off collections, although a minority of issuers allowed slightly 

higher daily phone contact attempts in post-charge-off collections than in pre-charge-off 

collections. 

Most issuers either prohibit or strictly limit their third-party collectors from using email and 

text to initiate contact with borrowers in post-charge-off collections, although information may 

be sent via these channels if a borrower specifically requests it. However, a minority of issuers 

allowed their third-party debt collectors to send follow-up communications, such as payment 

reminders, via email. Some issuers required their collectors to stop using an email address for 

communications following a “hard bounce” (i.e., the recipient’s email ID was invalid), but 

allowed communication to continue following a “soft bounce” (i.e., the recipient’s inbox was 

full). 

Only a minority of the surveyed issuers reported that they sent an agency placement notification 

letter to alert the borrower that their debt had been placed with a third-party agency. These 

letters informed borrowers that their debt had been transferred, provided the name and contact 

information of the third-party agency, and offered borrowers an option to pay the balance online 

via the issuer’s website. 

All surveyed issuers monitored their third-party agencies’ collections performance, both relative 

to the issuer’s stated targets and to the performance of other agencies in the network. Several 

issuers reported that they tested a number of alternatives to determine optimal placement 

strategies between their internal recovery unit and third-party network. Respondents who 

engaged in such comparative testing indicated that based on the results of such tests, they are 

planning to retain a larger share of accounts to work internally in 2019.

7.3.3 Litigation 

Card issuers may sue a borrower in certain situations to recover outstanding debts. Issuers use 

litigation strategies for both pre- and post-charge-off accounts, although only a minority of 

issuers reported initiating litigation proceedings prior to charge-off. According to the Bureau’s 

current survey, issuers may select accounts for litigation based on factors such as account 
159 BUREAU OF CONSUMER FINANCIAL PROTECTION — CONSUMER CREDIT CARD MARKET REPORT

balance, level of delinquency, and estimated likelihood of payment (indicated by the presence of 

assets and employment income). All issuers in the survey that litigated credit card debt reported 

that they used an external network of attorneys. A minority of issuers also reported that they 

leverage an internal attorney network to execute their litigation strategies. As observed in the 

Bureau’s 2017 Report, a few issuers noted that they may litigate accounts upon notification that 

a consumer is working with a debt settlement company.249 

All issuers that litigated debt reported that the volume of new balances placed in the litigation 

channel increased significantly during the survey period, with year-over-year growth ranging 

from nearly 10 to 55 percent across issuers. For issuers that used the litigation channel, litigated

balances as a percentage of total post-charge-off inventory ranged from a low of 5 percent to a 

high of 36 percent. Increased litigation volume may be partially attributable to overall growth in 

delinquency and charge-off volumes during the review period. However, some issuers also 

indicated increasing use of the litigation channel in response to a growing volume of accounts in 

cease communication status (see Section 7.4.2). Survey respondents generally selected higherbalance accounts from their portfolios for litigation, with average litigated account balances 

ranging from $3,000 to $11,000 across issuers during the current survey period, compared to 

average pre-charge-off balances ranging from $1,300 to $4,800.

DEFAULT JUDGMENTS

A default judgment is a ruling in favor of the plaintiff collector when the defendant consumer 

has failed to respond to a summons or to appear in court. More than one-half of the issuers that 

use litigation as a strategy did not report default judgments separately. However, respondents 

who do track default judgments separately reported that more than 70 percent of all judgments 

were default judgments. This ratio was consistent with the Bureau’s previous report, and 

remained relatively flat between 2017 and 2018 among issuers who tracked default judgments 

separately.250 

 

249 2017 Report, supra note 5, at 331.

250 Id. at 326.
160 BUREAU OF CONSUMER FINANCIAL PROTECTION — CONSUMER CREDIT CARD MARKET REPORT

LITIGATION RECOVERY 

After a creditor has won a judgment on a litigated account, recovery may occur over a prolonged

period of time. To recover the debt, the issuer may exercise a wage garnishment against the 

debtor or ask the debtor to enroll in a payment plan. Thus, litigation generally produces a steady 

stream of recoveries from accounts with judgments against them, spread over a longer time 

period that may span several years. Figure 7 shows the cumulative recovery rate by months since 

judgment for vintages of accounts where a judgment was obtained between 2017 and 2018. 

Issuers recovered an average of 24 percent of the judgment balance for accounts where a 

judgment was obtained in the first quarter of 2017 (at 24 months, the longest performance 

window captured in the survey). Cumulative recoveries increased steadily over time as each 

vintage aged and a consistent flow of payments were applied to the account.

CUMULATIVE RECOVERY RATES BY MONTHS SINCE JUDGMENT WAS RECEIVED (MMI)251

The average two-year cumulative recovery rate for accounts with judgments was 24 percent, 

almost twice the overall two-year cumulative recovery rate for all charged-off accounts (compare 

with Figure 6). Accounts with judgments may have higher cumulative recovery rates because 

issuers disproportionately litigate accounts with a higher ability to repay—assessing borrowers’ 

assets, employment, and other income as indicators. 

 

251 Here, each bar represents a "vintage" of accounts where judgment was received in a given quarter, starting with Q1 

2017. Cumulative recovery for each vintage is measured as of December 31, 2018. 

3 6 9 12 15 18 21 24

0%

5%

10%

15%

20%

25%
161 BUREAU OF CONSUMER FINANCIAL PROTECTION — CONSUMER CREDIT CARD MARKET REPORT

7.3.4 Debt sales

As part of their post-charge-off recovery strategy, some credit card issuers may sell credit card 

debt at a discounted rate to pre-selected debt buyers, receiving a fraction of the outstanding 

account balances sold. Typically, these sales are structured as “forward-flow” contracts, where a 

pool of accounts that meet a pre-determined criteria (e.g., at charge-off or post-primary 

placement) are sold to the debt buyer on an ongoing (e.g., monthly) basis. Issuers may also 

occasionally identify additional segments of accounts and sell them on an ad hoc basis 

depending upon market conditions. Finally, issuers may employ specific debt sale strategies for 

special segments like accounts where the issuer has received a notice of bankruptcy, where 

specialized expertise may be required to recover the amount owed. Debt buyers typically enter 

into contracts for the right to collect the entire balance, and they either attempt to collect 

themselves or employ third-party agencies to collect on their behalf on a contingency-fee basis. 

MARKET STRUCTURE

The debt-buying market for credit card debt remains highly concentrated among a few buyers 

that purchase debt from many of the same issuers. Most of the surveyed issuers that sold debt in 

2018 reported a roughly similar number of buyers year-over-year. However, there is a general 

trend of consolidation among surveyed issuers’ debt buyer networks: the Bureau’s 2017 Report 

found that in 2016, 20 unique debt buyers bought debt from the surveyed issuers that sold debt, 

while the current survey found that there were 15 unique buyers in 2018.252 Eight buyers 

purchased debt from two or more issuers and six buyers bought debt from all the issuers that 

sold debt. 

DEBT SALE VOLUME

Fewer than one-half of issuers surveyed sold debt in 2017 and 2018, and these issuers were the 

same ones that reported selling debt in the Bureau’s 2017 Report. Issuers that reported that they 

did not sell debt in 2017 and 2018 also indicated that they have no plans to do so in 2019. A 

majority of issuers that sold debt during 2017 and 2018 reported that they planned to sell a 

 

252 2017 Report, supra note 5, at 327. 
162 BUREAU OF CONSUMER FINANCIAL PROTECTION — CONSUMER CREDIT CARD MARKET REPORT

lower percentage of debt in 2019 compared to 2018, while a minority reported that they planned 

to sell roughly the same amount. This is a reversal from the results of the Bureau’s 2017 Report, 

where all issuers that sold debt reported that they planned to sell a higher proportion of chargeoffs in the next year due to heighted delinquencies and charge-offs.253 In general, issuers that 

planned to reduce their use of debt sale strategies in 2019 explained this decision as an attempt 

to diversify post-charge-off recovery income across channels and strengthen financial resiliency. 

The survey respondents that sold debt in 2018 indicated that they planned to sell approximately 

45 percent of their freshly-charged-off debt in 2019 at an expected average price ranging from 

$0.09 to $0.13 per dollar of debt balances. 

Figure 8 compares the distribution of total post-charge-off inventory by recovery channel for 

issuers that did and did not sell debt in 2017 and 2018. Issuers that sold debt in 2017 and 2018 

reported that in that period, roughly 12 percent of total post-charge-off inventory was sold to 

debt buyers. While both issuers that sold debt and those that did not sell debt relied on thirdparty agencies to collect a significant share of their charged-off inventory, issuers that did not 

sell debt placed a greater portion of balances in the internal recovery channel. As post-charge-off 

inventory aged between 2017 and 2018, all issuers held a growing share of debt in the warehouse 

category, where typically no active attempts are made to collect the balance owed.

 

253 Id.
163 BUREAU OF CONSUMER FINANCIAL PROTECTION — CONSUMER CREDIT CARD MARKET REPORT

SHARE OF CHARGED-OFF BALANCE INVENTORY BY CHANNEL FOR ISSUERS THAT DID AND 

DID NOT SELL DEBT (MMI)254

DEBT PRICE

Charged-off debt generally sells for a fraction of the account balance owed or “face value,” at a 

price largely dependent upon the age of the debt. Additionally, certain special segments of debt, 

such as accounts for which the issuer has received notice of bankruptcy, may command higher 

prices. The price of bankruptcy accounts may be above the overall average price of debt sold 

because the buyer may be able to recover a larger portion of the debt by filing proofs of claim as 

part of the bankruptcy process. Figure 9 shows the average price of debt by type. The overall 

average price of debt increased from 11 percent to 12 percent of face value between 2017 and 

2018. However, the price of freshly-charged-off debt declined from 14 percent to 13 percent of 

face value over the same period. The price of freshly-charged-off debt is now 2 percentage points 

lower than its previous high of 16 percent reported in 2016.255 

 

254 Bars represent the average share of total charged-off balance inventory in each of the five recovery channels. The 

issuers provided the share of balances placed in each channel by quarter as of the end of the quarter for 2017 and 

2018. The distributions for 2017 and 2018 were averaged by issuer, and then averaged across issuers that sold debt 

and issuers that did not sell debt.

255 2017 Report, supra note 5, at 329. 

Third Party Internal Litigation Warehouse Sale

0%

10%

20%

30%

40%

Issuers that sold debt Issuers that did not sell debt
164 BUREAU OF CONSUMER FINANCIAL PROTECTION — CONSUMER CREDIT CARD MARKET REPORT

AVERAGE PRICE OF DEBT SOLD AS A PERCENTAGE OF ACCOUNT BALANCE BY TYPE OF 

DEBT SOLD (MMI)

Debt sold after one or more placements (post-primary) was priced at only 9 percent. Accounts

where the collector received a request to cease and desist communications or received a notice of 

bankruptcy sold for an average of roughly 14 percent of face value in 2018, suggesting higher

expected debt buyer recoveries from such accounts. 

DEBT SALE CONTRACTS

All survey respondents that sold debt reported that they provide buyers with key documents and 

account information at the time of sale, including:256 

 The account’s last 12 statements;

 The amount and date of the last account payment;

 Itemized account of all amounts claimed, including principal, interest, and fees;

 Special status indicators (e.g., attorney representation or cease and desist); and 

 Information relating to prior collection efforts. 

 

256 An RFI commenter noted that OCC Bulletin 2014-37, which provided guidance on documentation to be 

transferred upon the sale of debt, applies only to national banks and federal savings associations, and not to credit 

card issuers more broadly. See ABA Comment Letter at 8. 

Overall Fresh charge-off Post-primary Cease and desist Bankruptcy

0%

5%

10%

15%

2017 2018
165 BUREAU OF CONSUMER FINANCIAL PROTECTION — CONSUMER CREDIT CARD MARKET REPORT

After the debt is sold, issuers reported that they may provide additional documentation at the 

buyer’s request, including cardholder agreements, written applications, affidavits, and earlier 

account statements. While most issuers who sold debt reported that debt buyers do not pay a fee 

to access these documents, a minority reported charging a fee to provide additional 

documentation.

All surveyed issuers that sold debt also stated that they send out “goodbye” letters to the 

cardholder. These letters inform borrowers of the sale and provide the name and contact 

information of the buyer. 

Contractual restrictions imposed on buyers by all surveyed issuers that sold debt are generally 

consistent with OCC Bulletin 2014-37, and include:257 

 Restrictions on resale of the debt, which is limited to special circumstances (e.g., the 

buyer exiting the market);

 Restrictions on buyers’ ability to assess interest on the purchased debt;

 Restrictions on buyers’ ability to litigate purchased accounts;

 Prohibitions on litigation by buyers on debt that is past the statute of limitations; and

 Conditions under which the issuer will repurchase the debt.

Debt sale contracts generally do not restrict debt buyers from reporting to credit reporting 

agencies. Instead, the contracts require that the buyer adhere to all Fair Credit Reporting Act 

requirements.

 

257 See Off. of the Comptroller of the Currency, Consumer Debt Sales - Risk Management Guidance, OCC Bulletin 

2014-37 (Aug. 4, 2014), available at http://www.occ.gov/news-issuances/bulletins/2014/bulletin-2014-37.html. 
166 BUREAU OF CONSUMER FINANCIAL PROTECTION — CONSUMER CREDIT CARD MARKET REPORT

7.4 Special topics in credit card collections

7.4.1 Debt settlement companies 

Borrowers sometimes work with DSCs, which are typically for-profit entities with the primary 

objective of enrolling qualified borrowers in a debt settlement program.258 These firms do not 

receive any compensation from issuers. Instead, they typically assess the borrower a fee based 

on the original debt balance and contingent upon completing the settlement with the creditor. 

Debt settlement programs involve redirecting payments that consumers would have made to 

creditors to a borrower-controlled fund, which is then used by the debt settlement company to 

pay negotiated settlements. Since enrolled consumers stop making payments to creditors, 

borrowers who work with the DSCs typically find that their accounts continue to grow in 

delinquency and are reported to the credit reporting agencies.259 Issuers may also pursue legal 

collections on these accounts. DSCs also often advise consumers to send a cease and desist 

communication letter to creditors as part of the program. Those issuers who sell debt often sell 

charged-off debt for which they have received a cease and desist communication letter to debt 

buyers because such debts generally are more difficult to recover. 

All of the surveyed issuers have established policies and procedures about how to manage 

accounts enrolled with DSCs. In most cases, issuers require a third-party authorization 

document signed or otherwise authorized by the consumer in order to communicate with the 

DSC about the account. Some issuers reported that they will not negotiate settlements with 

DSCs even after receiving third-party authorization from the consumer. Some issuers have 

policies that allow the accounts to move quickly to placement with special third-party agencies 

for potential litigation. Most issuers that work with DSCs reported that they apply the same 

 

258 See Greg J. Regan, Options for Consumers in Crisis: An Updated Economic Analysis of The Debt Settlement 

Industry, American Fair Credit Council, (Feb. 5, 2018), available at https://americanfaircreditcouncil.org/reganreports/ (data as of Mar. 31, 2017).

259 One RFI commenter claimed that consumers have “limited niche choices in debt relief assistance,” while also 

lacking data necessary to make informed choices about debt relief products and services. The commenter advocated 

greater disclosure of performance data for non-profit and for-profit debt relief providers, including “success rate, 

the impact to future retirement savings, credit report/score impact, protection from legal action, and cost of the 

solution.” See Steve Rhode Comment Letter, at 2.
167 BUREAU OF CONSUMER FINANCIAL PROTECTION — CONSUMER CREDIT CARD MARKET REPORT

settlement policies available to consumers who call the creditor directly to request settlements. 

However, a minority of issuers who work with DSCs have a set settlement rate specific to debt 

settlement companies, and these fixed rates forgive a smaller percentage of the balance owed 

than the floor settlement rates available to consumers who call the creditor directly and 

demonstrate financial hardship. In some cases, creditors have dedicated teams, either in-house 

or provided by third-parties, which specialize in engaging with DSCs.

INDEXED GROWTH IN PRE- AND POST-CHARGE-OFF DSC SETTLEMENT BALANCES, 

ACCOUNTS RECEIVABLE, AND FRESH CHARGE-OFFS (MMI)260

As shown in Figure 10, the volume of balances settled through DSCs grew proportionately faster 

than the growth in the issuers’ overall account receivables and fresh charge-offs between 2017 

and 2018. Pre-charge-off settlements grew 117 percent and post-charge-off settlements grew 104 

percent between 2017 and 2018, compared to only 16 percent growth in accounts receivables

and 12 percent growth in fresh charge-offs. Respondents reported nearly $2.2 billion in debt 

settled through DSCs within the two year survey period, $1.4 billion of which was settled postcharge-off, almost twice the volume of pre-charge-off settlements. Growth in pre-charge-off

settlements accelerated more quickly than in post-charge-off settlements within the first half of 

the survey period before leveling off in 2018. 

 

260 This graph represents changes in balances settled through for-profit DSCs, accounts receivables, or fresh chargeoffs indexed to the values in the first quarter of 2017. These numbers do not include settlements for accounts where 

legal representation or other third parties were involved in settlement negotiations.

75

100

125

150

175

200

225

250

2017Q1 2017Q2 2017Q3 2017Q4 2018Q1 2018Q2 2018Q3 2018Q4

Pre-charge-off DSC settlement Post-charge-off DSC settlement

Total accounts receivable Fresh charge-offs
168 BUREAU OF CONSUMER FINANCIAL PROTECTION — CONSUMER CREDIT CARD MARKET REPORT

7.4.2 Cease communication

All issuers reported honoring cease communications requests, both verbal as well as written, 

from the consumers or their power-of-attorney, though only a minority of issuers reported 

tracking volumes of written requests separately from verbal requests. Issuers accommodated 

requests to cease all communications (phone calls, written communications, etc.) except to send 

legally required communications like monthly statements. They also accommodated special and 

limited cease communication requests (e.g., “no phone calls only,” “no calls to place of 

employment”). For accounts placed with third-party collectors, issuers generally recall those 

accounts with cease and desist requests and place them with attorney firms for further 

collections, including litigation. Those issuers who reported selling debt post-charge-off, 

regularly sold accounts with cease communication status. In 2018, 2.8 percent of the precharge-off balance inventory had cease and desist communication status, a 7 percent increase 

from 2017. Similarly, 4.7 percent of the post-charge-off balances had cease communication 

status representing a 10 percent increase compared to 2017. These increases may partly be due 

to the fact that more consumers are working with for-profit DSCs, who advise their clients to 

send cease communication requests to their creditors while waiting to negotiate settlements.

7.4.3 Consumer-level collections

When a consumer has multiple delinquent accounts, issuers may choose to collect debt at the 

consumer level by managing all the delinquent accounts together. Three-fourths of the surveyed 

issuers noted that they pursued some degree of consumer-level pre-charge-off collections for 

borrowers with multiple delinquent accounts, the same as in the Bureau’s 2017 Report.261

Respondents indicated that consumer-level collection strategies were more common for internal 

and first-party pre-charge-off collections than for third-party collections. Issuers who utilized a 

consumer-level strategy for pre-charge-off collections generally reported that the oldest 

delinquent account with the highest balance in the relationship was the lead account, and that 

all of a consumer’s delinquent accounts were discussed during a single call to the consumer. The 

percentage of total pre-charge-off delinquent dollars belonging to consumers with multiple 

 

261 2017 Report, supra note 5, at 333.
169 BUREAU OF CONSUMER FINANCIAL PROTECTION — CONSUMER CREDIT CARD MARKET REPORT

accounts from the same issuer varied widely across issuers, ranging from 5.2 to 66 percent in 

2018. 

Most of the surveyed issuers did not have a consumer-level approach for recovering postcharge-off debt. For the minority of issuers that used a consumer-level recovery strategy postcharge-off, some issuers reported that they placed all of a consumer’s charged-off accounts with 

the same third-party agency, while others reported that they used a litigation strategy involving 

assigning all of a consumer’s charged-off accounts to the same law firm. 
170 BUREAU OF CONSUMER FINANCIAL PROTECTION — CONSUMER CREDIT CARD MARKET REPORT

8. Innovation

The Bureau’s Congressional mandate to review the credit card marketplace specifically instructs 

the agency to assess “credit card product innovation.”262Consumer and provider access to digital 

technology is fundamentally changing the ways in which consumers obtain and use credit cards. 

Since the 2017 Report, digital account servicing platforms, such as websites and mobile apps 

where consumers can view and manage account activity, continue to increase in the number of 

available features. Cardholders continue to transact online in large volumes and mobile wallets 

are increasingly used at the physical point-of-sale (POS). Gains in computing power and data 

analysis technology are being used by card issuers to enhance credit and risk management. 

Because of these innovations, consumers with access to the relevant technology can now readily 

and rapidly:

 Access their credit score and information about how to manage and improve their score;

 Identify and compare credit cards according to their own criteria;

 Apply for credit cards and, if approved, be able to use the card in near real-time;

 Permit/Allow the use of new data in the underwriting process;

 Specify the delivery of alerts about card use or payment obligations;

 Receive promotional offers based on the consumer’s choice of criteria, such as location;

 Turn card functionality off and on, or limit and control its use in certain channels;

 

262 15 U.S.C. § 1616(a)(4)(D) (2012). Congress established the Bureau's statutory purpose as ensuring that all 

consumers have access to markets for consumer financial products and services and that markets for consumer 

financial products and services are fair, transparent, and competitive. See 12 U.S.C. 5511(a) (2012). The Bureau’s 

objective includes exercising its authorities for the purpose of ensuring access and innovation. See 12 U.S.C. 

5511(b)(5) (2012).
171 BUREAU OF CONSUMER FINANCIAL PROTECTION — CONSUMER CREDIT CARD MARKET REPORT

 Manage card use interactively in accordance with the consumer’s overall strategy for 

personal financial management; and

 Choose to repay obligations on the card with new alternative payment options.

Although some of these innovations have been available to some consumers for some time, the 

collective availability of these tools and use at scale is becoming a competitive differentiator in 

today’s consumer credit card market. Digitally-based tools have been introduced in multiple 

stages of the product’s life cycle—shopping, origination, servicing, and transacting.263 

This section covers some of these recent changes in more detail. Section 8.1 reviews a number of 

changes associated with card servicing, including account management and payment tools. 

Section 8.2 covers a number of recent innovations at the point-of-sale. Section 8.3 reviews 

innovation in credit and fraud risk management.264 

8.1 Account servicing innovation

8.1.1 Account management enhancements

Most basic account servicing actions are now standard in card companies’ mobile and online 

platforms. As discussed in the 2017 Report, cardholders can review transactions (and dispute 

fraudulent ones), make payments, transfer balances, request cash advance PINs, activate new 

cards, request replacement cards, download full account statements, receive information about 

other card benefits, add or remove an authorized user from their accounts, inform their issuer of 

upcoming travel, report a card lost or stolen, change their account’s due date, or send and read 

 

263 See supra note 2.

264 Important innovations related to card marketing and comparison shopping are covered in Section 4.1.
172 BUREAU OF CONSUMER FINANCIAL PROTECTION — CONSUMER CREDIT CARD MARKET REPORT

messages to and from account servicing professionals or chat with them in real-time.265 More 

recent changes provide customers with new account management features.

Important developments to these platforms include:

 Many credit and debit card providers now offer a feature that lets customers instantly 

freeze and subsequently ‘un-freeze’ the cards within the mobile app.266 At least one credit 

card provider offers customers the ability to manage recurring card payments within its 

mobile app.267 Another credit card provider offers cardholders virtual card numbers that 

can be used for individual or recurring transactions and may be accessed and dialed 

through a mobile app.268 Another credit card provider has started to offer their 

customers the ability to dictate where or when the cards can be used, allowing 

consumers to set spending limits and alerts across merchant categories.269 Both features 

may allow cardholders to have better control over their payment cards.270

 

265 See 2017 Report, supra note 5, at 171. 

266 See Susan Ladika, Credit card on/off switches: More card issuers adding them, Creditcards.com (Feb. 19, 2018), 

available at https://www.creditcards.com/credit-card-news/credit-card-on-off-switches.php; see also Press 

Release, Chase, Chase Lets Customers Lock, Unlock Credit Cards from Their Phone and Computer, (Sept. 27, 

2018), available at https://www.businesswire.com/news/home/20180927005487/en/Chase-Lets-CustomersLock-Unlock-Credit-Cards. 

267 Press Release, Wells Fargo, Wells Fargo Launches Control Tower, New Digital Experience for Customers 

Nationwide (Oct. 1, 2018), available at https://www.businesswire.com/news/home/20181001005683/en/WellsFargo-Launches-Control-Tower-SM-New. 

268 Kelly Dilworth, Virtual card numbers: Safer, Convenient, and a Spending Risk, Creditcards.com (Mar. 29, 2018), 

available at https://blogs.creditcards.com/2018/03/virtual-card-numbers-safer-convenient-and-a-spendingrisk.php. 

269 Press Release, Barclays, Barclays Launches “Control Your Card” Digital Features to Give Cardmembers More 

Control Over Credit Card Usage (Apr. 16, 2019), available at https://www.prnewswire.com/newsreleases/barclays-launches-control-your-card-digital-features-to-give-cardmembers-more-control-over-creditcard-usage-300832388.html. 

270 The developments build on functionality rolled out by the networks in 2016. Visa’s Consumer Transaction 

Controls “enables account holders to set simple, convenient, and effective spending controls, receive transaction 
173 BUREAU OF CONSUMER FINANCIAL PROTECTION — CONSUMER CREDIT CARD MARKET REPORT

 Card companies are now employing AI-powered chatbots to navigate and execute digital 

account management functions and make transactions.271 Some of the most heavilypromoted chatbots are provided as tools within the issuers’ mobile apps, where they 

provide an alternative method of accessing the apps’ features in addition to providing 

higher-order functionality, such as responding to questions about spending patterns. For 

example, cardholders can use voice or text to direct a chatbot to search for certain 

transactions, display basic account information, add an authorized user, summarize and 

plot monthly spending, or send alerts for upcoming bills, among other options. Many 

chatbots are responsive to both voice and text, with voice recognition requiring an 

additional layer of technology. Several issuers and one network have integrated chatbots 

into the Facebook Messenger platform with the aim of providing a better experience for 

customers that transact through the app.272

 Several issuers have recently provided a means for consumers to load credit cards into 

digital wallets directly from individual issuers’ mobile apps. Originally, cardholders had 

to navigate to a digital wallet and load it with the requisite card information. Now for 

certain mobile wallets, some issuers allow cardholders to manage this process beginning 

in the issuers’ mobile apps, where card information is pre-loaded.273

 

alerts, or even temporarily suspend their accounts using a simple on/off feature.” See Press Release, Visa, Visa Puts 

Consumers in Charge of Security (Feb. 9, 2016), available at

http://www.businesswire.com/news/home/20160209005812/en/Visa-Puts-Consumers-Charge-Security. 

Mastercard’s In Control product can grant “greater convenience, security and control to consumers, small 

businesses and corporations,” and “parents, employers and other customers can set parameters for when, where 

and how cards are used, giving them more control over their accounts.” See Mastercard, Empower Your Customers 

with Mastercard In Control, available at https://www.mastercard.us/en-us/issuers/products-and-solutions/growmanage-your-business/payment-innovations/mastercard-in-control.html (last visited July 1, 2019).

271 Dawn Allcot, Artificial Intelligence is Changing Credit Cards and Banking, Bankrate.com (Feb. 4, 2019), 

available at https://www.bankrate.com/credit-cards/artificial-intelligence-banking-credit-card-rewards/. 

272 Rachel Brown, Mastercard, American Express and Wells Fargo charge up Facebook Messenger chatbots, Mobile 

Marketer, (Apr. 19, 2017), available at https://www.mobilemarketer.com/news/mastercard-american-express-andwells-fargo-charge-up-facebook-messenger-c/440724/. 

273 See American Express, Apple Pay, https://www.americanexpress.com/us/credit-cards/features-benefits/digitalwallets/apple-pay.html (last visited June 19, 2019). See also Bank of America, Show me how to: Digital wallets, 
174 BUREAU OF CONSUMER FINANCIAL PROTECTION — CONSUMER CREDIT CARD MARKET REPORT

 Several new credit cards provide interactive digital interfaces to assist the cardholder in 

making payments toward their credit card balances. Using one of these interfaces, a 

cardholder can ‘dial’ or ‘slide’ from the minimum payment amount to the full balance 

and see corresponding finance charges.274

8.1.2 Increased repayment options

One especially-notable new feature in account servicing is payment flexibility. Previous reports 

reviewed two types of emerging lending products that offer consumers alternative repayment 

options: (1) unsecured personal loans from fintech lenders used to pay off revolving credit card 

balances and (2) non-card loans offered to consumers at the point-of-sale as a credit-based 

payment option. The number of providers of these emerging lending products has continued to 

grow, while several credit card issuers have responded by introducing competing features on 

card accounts allowing for new forms of payment flexibility.

PERSONAL LENDING

Closed-end unsecured personal loans, such as those offered by nonbank lenders, compete with 

credit cards for consumer loan balances.275 Personal loans are generally aimed at consumers 

looking to consolidate or reduce the cost of carrying credit card debt or those looking to finance 

a large purchase. As closed-end loans meant for a specific use, personal loans may, for some 

cardholders, be a lower cost means of borrowing than revolving a credit card balance. If used 276

 

https://promo.bankofamerica.com/cbobrochure/?showme_howto=digital (last visited June 19, 2019). See also Citi, 

It’s faster than ever to add your Citi card to Apple Pay right from the Citi Mobile App, 

https://www.citi.com/credit-cards/creditcards/citi.action?ID=citi-apple-pay (last visited June 19, 2019). 

274 See, e.g., Apple, Apple Card, https://www.apple.com/apple-card/ (last visited July 23, 2019); Petal, Petal Card, 

https://www.petalcard.com/ (last visited July 23, 2019).

275 Loans of this nature are received as a cash disbursement and do not generally compete with credit card 

transacting.

276 For example, one study found that given the same credit risk, consumers would be able to obtain credit at a lower 

rate through an online personal lender than through traditional credit cards. Study abstract: “for the same risk of 

default, consumers pay smaller spreads on loans from the Lending Club than from traditional lending channels.” 
175 BUREAU OF CONSUMER FINANCIAL PROTECTION — CONSUMER CREDIT CARD MARKET REPORT

to repay or consolidate credit card balances, personal loans also have the effect of increasing a 

cardholder’s available line. There is an emerging body of research on the use of personal loans 

and their relationship to credit card debt. Consumer use and outcomes are still being 

researched.277

Personal loans have long been offered by banks and specialty finance companies, but 

competition has sharply increased since the Great Recession. Leading up to and then following 

the recession, online lenders emerged with a focus on providing personal loans to consumers for 

the purpose of debt consolidation.278 Since the end of 2015, consumer personal loan balances 

have increased by 34 percent.279 Credit card companies have begun to offer personal loans 

themselves and one bank made its first entry into the consumer market with a personal loan 

product.280At least one student loan refinancing company has expanded into personal 

lending.281 Some banks have entered partnerships with fintechs to offer personal loans through 

fintechs’ platforms.282

 

See Julapa Jagtiani and Catharine Lemieux, Fintech Lending: Financial Inclusion, Risk Pricing, and Alternative 

Information, (July 18, 2017), available at https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3005260. 

277 One working paper finds that consumers that receive personal loans from fintech companies are likely to use the 

additional funds for consumption rather than for consolidating high-cost credit card debt. See Marco Di Maggio & 

Vincent Yao, Fintech Borrowers: Lax-Screening or Cream-Skimming?, (Aug. 1, 2018), available at

https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3224957. 

278 See J. Christina Wang, Technology, the Nature of Information, and Fintech Marketplace Lending, at 6. Fed. 

Reserve Bank of Boston (Oct. 2018) available at https://www.bostonfed.org/publications/current-policyperspectives/2018/technology-nature-of-information-fintech-marketplace-lending.aspx. 

279 Oliver Wyman Experian MIR Q4 2018 and MIR Q4 2017.

280 AnnaMaria Andriotis & Peter Rudegeair, Lenders Shunned Risky Personal Loans. Now They’re Competing for 

Them, Wall St. J. (Aug. 24, 2018), available at https://www.wsj.com/articles/lenders-shunned-risky-personalloans-now-theyre-competing-for-them-1535103000. 

281 See SoFi, Personal Loans, https://www.sofi.com/personal-loans/ (last visited June 19, 2019). 

282 Press Release, Regions Bank, Regions Bank to Offer Expanded Online Consumer Loan Experience Powered by 

Leading Fintech Firm Avant (Apr. 8, 2016), available at

https://www.businesswire.com/news/home/20160408005117/en/Regions-Bank-Offer-Expanded-Online-
176 BUREAU OF CONSUMER FINANCIAL PROTECTION — CONSUMER CREDIT CARD MARKET REPORT

ALTERNATIVE CREDIT OPTIONS ONLINE AND AT THE POINT-OF-SALE

Another type of non-card loan offered to consumers for online purchases and at the physical 

POS offer a more direct alternative to credit cards than personal loans, and are sometimes 

marketed as such. Non-card loans at the online POS are typically closed-end, fully-amortized 

installment loans that are presented to consumers when making a purchase with a participating 

merchant, generally by means of a branded “pay with” button as a payment option during 

checkout. Physical POS financing is also available at some retailers through partnerships with 

lenders. In both cases, after inputting several pieces of personal information (sometimes on a 

merchant’s device if in-store) a consumer is presented with repayment options as a result of a 

near real-time automatic underwriting process. Once an approved consumer’s preferred terms 

have been selected, funds are sent directly to the merchant.

Competition with credit cards may intensify if these products become more widely available. 

Several POS lenders, for example, have engaged in strategies that leverage debit card networks 

to expand acceptance of their products beyond their merchant partners.283 While many 

providers primarily serve online POS, competition at physical POS is increasing. One lender

expanded to the physical POS with a major retailer partnership.284 A payments provider recently 

announced plans to provide physical POS consumer loans through its merchant network.285

One emerging point of product differentiation is pricing. The more-established alternative 

lenders generally charge interest on POS loans. In some cases, financing may be offered for free 

 

Consumer-Loan. See also Hannah Levitt, HSBC U.S. Partners With Web-Based Avant to Offer Personal Loans, 

Bloomberg (Oct. 22, 2018), available at https://www.bloomberg.com/news/articles/2018-10-22/hsbc-u-spartners-with-web-based-avant-to-offer-personal-loans. 

283 Providers that offer this capability describe it as using one-time prepaid debit cards. See Affirm, Affirm In-store 

Virtual Card, available at https://docs.affirm.com/Merchant_Resources/Affirm_In-store_Virtual_Card (last 

visited June 26, 2019). See also Klarna, What is a Ghost card?, https://www.klarna.com/us/customerservice/what-is-a-ghost-card/ (last visited June 26, 2019). 

284 Kevin Wack, Walmart teams with Affirm to offer point-of-sale loans, PaymentsSource (Feb. 27, 2019), available 

at https://www.paymentssource.com/news/walmart-teams-with-affirm-to-offer-point-of-sale-loans. 

285 Selina Wang, Jack Dorsey’s Square Rolls Out Lending for Customer Purchase, Bloomberg (Oct. 4, 2018), 

available at https://www.bloomberg.com/news/articles/2018-10-04/jack-dorsey-s-square-rolls-out-lending-forcustomer-purchases. 
177 BUREAU OF CONSUMER FINANCIAL PROTECTION — CONSUMER CREDIT CARD MARKET REPORT

to the consumer, in which cases, the lenders generally receive additional compensation from the 

merchant. A new group of alternative POS lenders now offers no-interest financing as a default

model. For example, several providers allow consumers to pay off purchases in a fixed number 

of installments—often four—over several months.286 These payments sometimes include no 

interest, although consumers can incur late or missed payment fees. Merchants pay these 

lenders a fixed amount or percentage of each transaction. Some of these products have shown 

rapid growth—and attracted calls for more regulatory attention—in foreign markets.287

CREDIT CARD PAYMENT INNOVATION

As the previous two categories of products continue to grow, credit card issuers are positioned to 

lose purchase and revolving volume. Personal loans used to pay off credit card balances cause 

issuers to miss out on interest and fee revenue that would have been paid over time. POS loans 

divert sales that would add to those outstanding balances, also resulting in lost interest and fee 

revenue.

These long-term threats to credit card profitability may have contributed to the development of 

flexible payment options for credit card purchases. New fixed payment features of accounts 

leverage a card’s existing credit line for a repayment plan that is separate from payments made 

toward the regular feature of the account, which may provide consumers with greater flexibility 

and control in paying down different purchases at different costs and speeds. Issuers have 

implemented a variety of these types of payment options into the card servicing platform for 

easier signup. New flexible payment features of credit card accounts fall into two categories: 

those that provide a payment plan for existing purchases and those that provide a payment plan 

for future purchases. 

 

286 Valeriya Safronova, It’s Layaway, But for a Post-Recession Economy, N.Y. Times (May 3, 2019), available at

https://www.nytimes.com/2019/05/03/fashion/afterpay-quadpay-klarna-affirm.html. 

287 Michael McGowan, Afterpay: buy-now pay-later scheme soars in popularity but experts sound warning, The 

Guardian (Sept. 20, 2017), available at https://www.theguardian.com/australia-news/2017/sep/21/afterpay-buynow-pay-later-scheme-soars-in-popularity-but-experts-sound-warning. 
178 BUREAU OF CONSUMER FINANCIAL PROTECTION — CONSUMER CREDIT CARD MARKET REPORT

The first set of features allows certain individual purchases made on a credit card to be paid off 

using fixed monthly payments over a set period of time. Issuers that offer this type of feature let 

consumers select eligible transactions through the card’s mobile app or online portal for fixed 

monthly payments.288 For issuers, the feature may help retain incremental balances on the card 

and undercut competition from alternative lenders. In announcing this feature, one bank’s 

leadership specifically noted that it will allow them to compete with other financial products at 

the POS.289 The issuers’ products (or announced products) differ slightly but, in general, 

purchases over a certain dollar threshold are eligible.290

Credit repayment flexibility is not new, but today’s options differ in their use of credit card 

mobile apps. One issuer launched a credit card balance management platform in 2009, but it

was delivered separately from the primary account interaction.291 Today’s repayment flexibility 

products are presented to the consumer in the flow of viewing his or her transaction history. 

Eligible transactions are denoted with an icon that links to the product terms. A range of 

repayment periods and corresponding costs are offered (e.g., three payments, six payments, or 

12 payments). In addition, one issuer provides a corresponding feature through which 

cardholders may pay down the account balance in an amount equal to a specific transaction’s 

dollar amount.

 

288 Issuers describe such fixed monthly payments in different ways. American Express describes payments as 

including a fixed monthly fee with no interest. Citi describes payments as payments with a fixed APR. Chase 

describes payments as subject to the My Chase Plan fee, a fixed finance charge.

289 Michelle Davis & Jennifer Surane, JPMorgan Sees a $250 Billion Opportunity in New Credit Card Loan 

Features, Bloomberg (Feb. 26, 2019), available at https://www.bloomberg.com/news/articles/2019-02-

26/jpmorgan-eyes-250-billion-loan-opportunity-in-new-card-features. 

290 This threshold ranges from $100 for American Express’s Plan It to $500 for JPMorgan Chase’s My Chase Plan. 

See American Express, Pay it Plan it, https://www.americanexpress.com/us/credit-cards/features-benefits/planit/prospect-plan.html (last visited June 20, 2019); see also, supra note 289. 

291 Chase’s Blueprint allowed consumers to split off certain purchases and pay them back with fixed payments. The 

feature was phased out in 2018. Robin Saks Frankel, Chase to Scrap Blueprint, Its Card Management Program, 

NerdWallet (Sept. 24, 2018), available at https://www.nerdwallet.com/blog/credit-cards/chase-ending-blueprintcredit-card-management-program/. 
179 BUREAU OF CONSUMER FINANCIAL PROTECTION — CONSUMER CREDIT CARD MARKET REPORT

The second set of new repayment options for credit card accounts consists of features that 

provide a payment plan for purchases yet to be made. Multiple issuers offer cardholders the 

opportunity to receive a cash disbursement from an unused portion of their credit line, which is 

repaid in equal monthly payments over a set period of time. These initiatives allow the issuers to 

increase consumer use of portions of credit line that are not currently being used. A card issuer 

may offer this feature to cardholders that meet certain basic eligibility checks, such as 

satisfactory payment history on the card and meaningful unused line size. Cardholders may be 

able to select different lengths of repayment, depending on their eligibility. The transactions 

extended under this feature are repaid using equal monthly payments for a set period of time.292

These features and their structures implicate a broad array of regulatory provisions. Card issuers 

working in this space must navigate a complex regulatory landscape, including, but not limited 

to, limitations on APR and fee increases, payment allocation rules, and ability-to-pay 

requirements. Costs for consumers may differ from the costs of other balance items when using 

new repayment options.

8.2 Innovation at the physical point-of-sale

Beyond lending, innovation continues to focus on streamlining the consumer experience at the 

physical POS, providing greater speed, security, or convenience for consumers and merchants. 

Three significant developments are evident at the physical POS.

First, beginning in early 2018, all four major U.S. card networks eliminated signature 

requirements for EMV “chip” card transactions.293 As merchant adoption of EMV terminals 

 

292 See, e.g., Citi, Citi Flex Loan, https://www.citi.com/credit-cards/creditcards/citi.action?ID=flex-loan (last visited 

June 13, 2019). See also Ethan Steinberg, Chase to Introduce Two New Credit Card Financing Options, The Points 

Guy (June 1, 2019), available at https://thepointsguy.com/news/my-chase-plan-my-chase-loan/. 

293 The EMV standard, often referred to as “chip” or “smart card” technology, is a security standard for credit and 

debit card transactions developed in the mid-1990s. The technology is most closely identified with a microchip 

embedded in a payment card, and is already widely used throughout much of the rest of the world outside of the 

U.S., particularly in developed economies such as Canada, Australia, and western Europe. EMVCo, which manages 
180 BUREAU OF CONSUMER FINANCIAL PROTECTION — CONSUMER CREDIT CARD MARKET REPORT

increased following the October 2015 liability shift, networks observed declines in fraud on 

transactions at EMV-enabled merchants. The elimination of the signature requirement in 

reliance on digital authentication technology could increase transaction speed for consumers 

and merchants.

Second, near-field communication (NFC) acceptance at the physical POS continues to increase. 

NFC-enabled terminals allow for the two-way transmission of payment-related information 

without physical contact between the payment device and merchant terminal. As covered in the 

2015 Report, many mobile wallets allow consumers to store payment information and make 

payments via smartphones or other digital devices.294 Several of these mobile payments use NFC 

technology, meaning that consumers can purchase goods and services at any business that has 

an NFC-enabled payment terminal. Early on, relatively few merchants supported such payments 

and consumer adoption was small. In the last few years, however, the number of retail locations 

supporting NFC mobile wallets has nearly doubled.295 Deployment of NFC terminals was 

initially delayed by the imminent transition to EMV, but now nearly all new terminals are 

 

the EMV specification, estimates that as of the second quarter of 2018, nearly 70 percent of card-present global 

transactions utilized the specification. See EMVCo, EMV Chip Deployment Statistics, 

https://www.emvco.com/about/deployment-statistics/ (last visited March 18, 2019).

294 Most notably, smartwatches. See Conor Allison, Google Pay: What it is, which smartwatches support it and how 

to use it, Wareable (Mar. 26, 2019), available at https://www.wareable.com/android-wear/how-to-set-up-useandroid-pay-wear-smartwatch. See also Apple, How to use Apple Pay, https://support.apple.com/en-us/HT201239

(last visited June 20, 2019). 

295 For example, in early 2017, several years after its launch, Apple Pay was accepted at 36 percent of retail locations. 

As of early 2019, Apple reported that Apple Pay is accepted at 65 percent of retail locations. Retailers that support 

Apple Pay also support other mobile wallets such as Google Pay. See Press Release, Apple, Apple Pay coming to 

Target, Taco Bell and more top US retail locations (Jan. 22, 2019), available at

https://www.apple.com/newsroom/2019/01/apple-pay-coming-to-target-taco-bell-and-more-top-us-retaillocations. See also Juli Clover, Apple Pay Now Supported by 36% of Merchants in the United States, MacRumors 

(Feb. 7, 2017), available at https://www.macrumors.com/2017/02/07/apple-pay-36-percent-united-states/. 
181 BUREAU OF CONSUMER FINANCIAL PROTECTION — CONSUMER CREDIT CARD MARKET REPORT

capable of accepting NFC transactions.296 An industry analyst reports that consumer adoption of 

mobile wallets was stagnant from 2015 to 2017.297

Third, contactless cards—common in many other countries—are becoming more common in the 

United States as several large issuers are providing cards with an embedded antenna.298

Generally, contactless cards contain technology that allows the transmission of card information 

to the reader, but cannot receive information from a device as is possible with NFC-equipped 

mobile devices.299 Contactless cards were initially launched by issuers in the mid-2000s but 

failed to gain significant uptake in large part due to limited acceptance at merchants. Recent 

payment terminal upgrades and consumer familiarity with contactless mobile wallet payments 

has led card companies to return to issuing contactless cards.300 The current generation of 

contactless cards may be used for contactless payments at NFC-enabled payment terminals and 

may also be used for traditional ‘dip’ or ‘swipe’ payments using the EMV chip or magnetic strip.

Contactless payment provides faster transaction time than current EMV payments. As with 

 

296 Thad Peterson, Contactless Cards in America—When, Oh When, Will They Appear?, Digital Transactions (Nov. 1, 

2018), available at https://www.digitaltransactions.net/magazine_articles/contactless-cards-in-america-when-ohwhen-will-they-appear/. See also PYMNTS, Visa: Why the US Is Finally Ready for Contactless, PYMNTS.com 

(Sept. 25, 2018), available at https://www.pymnts.com/visa/2018/contactless-cards-payments-mobile-walletpos-emv-apple-pay/. 

297 Press Release, Javelin, Merchants Winning the Battle for Mobile Wallet Supremacy (Sept. 7, 2018), available at 

https://www.javelinstrategy.com/press-release/merchants-winning-battle-mobile-wallet-supremacy. 

298 Contactless adoption has lagged behind other parts of the world in part because the United States was slower to 

migrate to EMV—a change that precipitated widespread upgrades to terminals able to support EMV and 

contactless. See Jim Daly, As U.S. Contactless Card Payments Ramp up, Canada and the U.K. Point the Way to 

Mass Adoption, Digital Transactions (May 21, 2019), available at https://www.digitaltransactions.net/as-u-scontactless-card-payments-ramp-up-canada-and-the-u-k-point-the-way-to-mass-adoption/. 

299 James Thrasher, RFID vs. NFC: What’s the Difference?, RFID Insider (Oct. 11, 2013), available at

https://blog.atlasrfidstore.com/rfid-vs-nfc. 

300 Jim Daly, Contactless II, Digital Transactions (Apr. 2, 2018), available at 

http://www.digitaltransactions.net/magazine_articles/contactless-ii/. See also Marianne Crowe & Elisa Tavilla, 

Tap to Pay: Will Contactless Cards Pave the Way for NFC Mobile Payments in the U.S.?, Fed. Reserve Bank of 

Boston (Apr. 23, 2019), available at https://www.bostonfed.org/publications/payment-strategies/tap-to-pay-willcontactless-cards-pave-the-way-for-nfc-mobile-payments-in-the-us.aspx. 
182 BUREAU OF CONSUMER FINANCIAL PROTECTION — CONSUMER CREDIT CARD MARKET REPORT

mobile payments, contactless cards transmit tokenized one-time payment codes, securing the 

card payment credentials. However, in contrast to mobile payments, contactless cards do not act 

a means of user authentication and do not prevent use of a stolen card.

8.3 Risk management innovation

Issuers are incorporating technological advancements and new data into risk-scoring models 

used for underwriting and for fraud management. 

8.3.1 Credit risk management innovation

Recent innovations in underwriting may enable credit card issuers to offer credit to more people 

more cheaply by leveraging new technology and the rising availability of new data sources. New 

underwriting solutions allow card companies to better evaluate credit risks to issue cards to 

thin-file and no-file consumers with greater confidence. The Bureau estimates 26 million U.S. 

adults lack sufficient data to generate a typical credit bureau score, either because they do not 

possess any reported credit history or because their credit history is limited or stale.301

Underwriting innovations have the potential to expand credit inclusion to portions of this 

population. An increasing ability for lenders to accurately assess risk could reduce the price of 

credit for those who are shown to be good risks (although it could increase the price of credit for 

those shown to be worse risks), and might even reduce the overall average price of credit for 

those who qualify for credit.302

 

301 See Office of Research, Bureau of Consumer Fin. Prot., Data Point: Credit Invisibles, (May 2015), 

http://files.consumerfinance.gov/f/201505_cfpb_data-point-credit-invisibles.pdf. 

302 The efficacy of these new data and computational techniques used for the purposes of credit risk management is 

still being understood. At least one non-profit organization, FinRegLab is partnering with industry to research the 

use of alternative data. See FinRegLab, Advancing the Safe & Smart Use of Technology & Data in Financial 

Services, https://finreglab.org/ (last visited July 19, 2019). 
183 BUREAU OF CONSUMER FINANCIAL PROTECTION — CONSUMER CREDIT CARD MARKET REPORT

Over the past several years, credit risk management innovation has focused on two areas: first, 

expanding the pool of eligible loan candidates; and second, developing tools that identify credit 

risk more effectively. Achieving either goal may involve the use of new datasets beyond the 

traditional credit repayment history data creditors have relied upon for decades. In addition, 

either may include analytical approaches, such as models that more heavily weigh recent credit 

behavior (also known as “trended data” solutions), and solutions that rely on machine learning 

to find new predictive combinations of indicators.303

NEW DATA SOURCES

Traditional credit scores use information available on standard credit reports sourced from one 

of the three national credit reporting agencies (NCRAs). Such information includes credit 

history, debts in collection, and bankruptcies.304Companies that build tools to aid the 

assessment of credit risk, however, have frequently invested in alternative sources of data. For 

example, companies have invested in data such as consumer payment history on non-financial 

products that have recurring billing, such as rent, telecommunications, and utilities.305 More 

recently, cash flow data from checking accounts has been leveraged.306 There are recent 

 

303 For some consumers, the use of new sources of information and analytical approaches may be a way to gain access 

to credit. Some commentators have raised concerns that new information sources and analytical approaches may 

pose risks to consumers or may not be in compliance with regulatory requirements. See 82 Fed. Reg. 11183 (Feb. 21, 

2017), NCLC Comment Letter, at 11.

304 Prior to July 2017, NCRAs included information on tax liens and civil judgments on consumer credit files. See Eric 

Ellman, Statement Consumer Data Industry Association, Consumer Data Industry Ass’n (Mar. 13, 2017), 

https://s3.amazonaws.com/rdcmscdia/files/production/public/PDFs/FNL.3.13.CDIA_Media_Statement_Liens.pdf. 

305 For example, NCTUE maintains a database of consumer payment information reported by utility and telecom 

providers, Experian RentBureau houses payment data reported by large landlords, and MicroBilt provides credit 

reports and scores that leverages the aforementioned data elements and more. See Nat’l Consumer Telecom & 

Utilities Exchange, Mission Statement, https://www.nctue.com/about-us (last visited July 19, 2019); Experian, 

Unlock the Power of Rental Payment Data, https://www.experian.com/rentbureau/renter-credit.html (July 19, 

2019); and MicroBilt, Lend Smarter. Collect Quicker. Grow Your Business., https://www.microbilt.com/ (last 

visited July 19, 2019). 

306 Checking account data is consumer-permissioned and is provided to score developers and issuers through data 

aggregation technology.
184 BUREAU OF CONSUMER FINANCIAL PROTECTION — CONSUMER CREDIT CARD MARKET REPORT

indications that these new data sources may become more broadly used for credit card 

underwriting. Important developments include the following:

 In 2015, credit-scoring company FICO introduced FICO Score XD, a score that uses 

traditional credit report information as well as—for consumers that lack sufficient credit 

history to generate a score using a credit report alone—telecommunications and utility 

payments, and public records and property data. The score is designed to share the same 

scale (300–850) and odds-to-score relationships as other FICO models.307 With the 

additional data, FICO reports being able to provide scores for more than half of 

previously unscored consumers.308

 Cash flow-based underwriting is an emerging trend that also depends on consumerpermissioned access to transaction data. As with other alternative data sources, cash 

flows may allow lenders to assess the credit risk of no-file and thin-file consumers with 

greater certainty. One company using such data offers perks and rewards with its credit 

cards that are not typical for entry level cards. Another purports to provide higher credit 

limits and lower interest rates than competitors, along with not charging any fees to 

customers. Yet another has a special application channel for international students 

studying in the United States.309

 In addition to card companies that have developed credit risk scoring models in-house, 

there is at least one commercially-available credit score, UltraFICO, which considers 

 

307 The odds-to-score relationship describes the repayment odds at a given credit score. 

308 FICO, FICO Score XD, https://www.fico.com/en/latest-thinking/product-sheet/fico-score-xd (last visited July 19, 

2019).

309 International students are likely to benefit from the use of cash flow underwriting because they typically lack 

credit history in the U.S. and do not possess a social security number.
185 BUREAU OF CONSUMER FINANCIAL PROTECTION — CONSUMER CREDIT CARD MARKET REPORT

consumers cash flows from consumer permissioned access to transaction account 

data.310

 In 2019, CRA Experian launched Boost, which allows individual consumers to 

permission access to bank account transaction data from which Experian records 

payments to telecommunications and utilities providers.311 Experian then adds positive 

payment history to Experian credit files for as long as the consumer stays enrolled. 

Experian reports that among a sample of consumer FICO scores, 10 percent of thin-file 

consumers became scoreable after using Experian Boost. Experian also reports credit 

score improvements among those that started with a score below 680.312

OTHER INNOVATIONS

New analytical approaches, which are often combined with alternative data sources, are being 

used more frequently than in the past for consumer loan underwriting. One analytical approach 

new in the last several years, trended data, is being applied by some score developers to 

standard credit bureau data.313 Traditionally, credit bureau scores consider discrete events 

within a credit history, such as the occurrence of a 60-day delinquency. In contrast, trended data 

considers the trend in credit behavior over time to help inform whether a consumer’s credit 

standing is improving or worsening.314 It does so by looking at specific data fields within a credit 

report, when they are available, such as the actual payment amount consumers make toward an 

 

310 As of this writing, UltraFICO is in its pilot phase. FICO, UltraFICO, https://www.fico.com/ultrafico/ (last visited 

July 19, 2019).

311 Commercially available credit scores have long considered payments to telecommunications and utilities providers

when this information is present on a consumer credit report; however, such information is rarely present on credit 

reports. 

312 Susan Henson, Introducing Experian Boost, a New Way to Instantly Improve Your Credit Scores, Experian (Apr. 

8, 2019), available at https://www.experian.com/blogs/ask-experian/introducing-experian-boost/. 

313 Lisa Prevost, A Focus on Credit History for Mortgage Approvals, N.Y. Times (Oct. 25, 2015), available at

https://www.nytimes.com/2015/10/25/realestate/a-focus-on-credit-history-formortgage-approvals.html. 

314 VantageScore, VantageScore Solutions Debuts VantageScore 4.0 Credit Scoring Model, (Apr. 3, 2017), available 

at https://www.vantagescore.com/news-story/226/vantagescore-solutions-debuts-vantagescore-40-credit-scoring. 
186 BUREAU OF CONSUMER FINANCIAL PROTECTION — CONSUMER CREDIT CARD MARKET REPORT

outstanding balance.315 Other approaches include the application of machine learning to risk 

scoring. Several known applications of machine learning based underwriting models exist in the 

subprime and non-credit card market.316 In addition, at least one new credit card company 

utilizes machine learning to evaluate credit risk and other card companies may also be exploring 

the use of machine learning-based credit scoring models as means to drive higher approval rates 

without sacrificing credit risk.317 It has been reported that one large retailer has encouraged 

partner banks to consider vendors that specialize in machine learning models.318

While technological advancements may benefit the credit card market, they may also present 

some risks. New technology has the potential to expand credit access, improve issuers’ risk 

assessment, and provide better service and convenience to consumers. However, certain 

advancements may have unintended side effects, including the potential for unlawful lending 

discrimination, or misunderstanding by consumers. The Bureau is interested in promoting 

innovation that may help extend affordable, responsible credit to more people, while at the same 

time ensuring compliance with applicable Federal and State law, so that consumers are treated 

fairly and remain protected.

 

315 In response to the Bureau’s Request for Information a commentator noted that sometimes credit card issuers do 

not report information to the credit bureaus that trended data models rely upon. See NCLC Comment Letter, at 10. 

316 Becky Yerak, AI Helps Auto-Loan Company Handle Industry’s Trickiest Turn, Wall St. J. (Jan. 3, 2019), available 

at https://www.wsj.com/articles/ai-helps-auto-loan-company-handle-industrys-trickiest-turn-11546516801. See 

also Penny Crosman, Is AI making credit scores better, or more confusing?, American Banker (Feb. 14, 2017), 

available at https://www.americanbanker.com/news/is-ai-making-credit-scores-better-or-more-confusing. 

317 John Adams, Can artificial intelligence match credit cards to millennials?, PaymentsSource (Sept. 8, 2017),

available at https://www.paymentssource.com/news/petal-uses-artificial-intelligence-to-lure-millennials-tocredit-cards. 

318 AnnaMaria Andriotis, The $10 Billion Tussle Over Walmart’s Credit Cards, Wall St. J. (Oct. 24, 2018), available 

at https://www.wsj.com/articles/the-10-billion-tussle-over-walmarts-credit-cards-1540378800. 
187 BUREAU OF CONSUMER FINANCIAL PROTECTION — CONSUMER CREDIT CARD MARKET REPORT

8.3.2 Fraud risk management innovation

Fraud remains a constant and costly reality of the credit card market. One recent estimate 

pegged total 2017 debit and credit card fraud at $24.26 billion, and projected that to increase to 

$34.66 billion by 2022.319This subsection briefly reviews fraud trends, then covers a number of 

trends in fraud prevention. 

CARD-PRESENT FRAUD AND EMV ADOPTION 

Card-present transactions involve physical cards and are susceptible to stolen or counterfeit 

card fraud. This type of fraud is continuing to decline in the wake of EMV roll-out in the United 

States.Visa, for example, reports that the dollar volume of counterfeit card fraud on its network 

has decreased 80 percent from September 2015 to September 2018 for merchants that have 

upgraded to chip-enabled terminals.

The adoption of EMV technology in the U.S. has been accompanied by the so-called “liability 

shift” that occurred in October 2015. It required liability for losses in card-present transactions 

to shift to whichever party—the card issuer or the merchant acquirer—had not implemented the 

EMV standard. By the end of 2018, U.S.-issued debit and credit chip cards in circulation totaled 

over 840 million, representing 61 percent of all U.S.-issued Visa cards.320

CARD-NOT-PRESENT (CNP) FRAUD

CNP transactions introduce additional security complications surrounding identity and 

authentication. As EMV technology has targeted card-present fraud and digital commerce has 

become more prevalent, fraudsters have shifted their focus to CNP fraud. Tokenization, 

discussed in detail in the 2015 Report, was introduced to limit the value of payment data 

breaches, however, there has been a simultaneous boom in digital commerce transactions. The 

U.S. Department of Commerce estimates that total e-commerce sales for 2018 were $513.6 

 

319 See The Nilson Report, No. 1142, (Nov. 2018).

320 See EMVCo, supra note 293.
188 BUREAU OF CONSUMER FINANCIAL PROTECTION — CONSUMER CREDIT CARD MARKET REPORT

billion, up 14.2 percent from 2017.321 As of 2018, over half of all debit and credit card fraud 

losses worldwide are from CNP transactions, totaling $6.5 billion.322

Card-not-present fraud also involves a different set of liabilities. Unlike card-present fraud, in 

which the credit card issuer generally bears financial liability absent specific circumstances 

allowing chargeback under network rules, merchants generally bear the financial liability in 

card-not-present fraud cases.

TRENDS IN FRAUD AND FRAUD PREVENTION

A consistent theme cutting across various types of fraud is the difficulty of verifying a customer’s 

identity. The plethora of recent data breaches have compromised a vast amount of consumer 

data that can be used to commit fraud. According to one estimate, since 2013 nearly 15 billion 

data records have been lost or stolen.323

Struggles with identity verification begin with application fraud. Using stolen or synthetic 

identifying information, fraudsters apply for financial products that can then be used for 

fraudulent payments and account access.324 One estimate predicts financial institutions’ costs 

associated with credit card application fraud will reach $781 million by 2020.325 Even if a 

consumer has been successfully identified in the application process, any credit card purchase 

can be a result of account takeover fraud. Fraudsters gain access to a customer’s account itself, 

 

321 U.S. Census Bureau News, U.S. Department of Commerce, Quarterly Retail E-commerce Sales , 4th Quarter 2018, 

(Mar. 13, 2019) available at https://www.census.gov/retail/index.html#ecommerce. 

322 See The Nilson Report, No. 1142, (Nov. 2018).

323 See Breach Level Index, Data Breach Statistics, https://breachlevelindex.com/ (last visited Mar. 18, 2019).

324 Synthetic fraud occurs when there is no real-world person from which identifying information is stolen. Instead, 

fraudsters manufacture identities with information required for credit applications.

325 Shirley W. Inscoe, Application Fraud: Fighting an Uphill Battle, Aite (Dec. 11, 2018), available at

https://aitegroup.com/report/application-fraud-fighting-uphill-battle. 
189 BUREAU OF CONSUMER FINANCIAL PROTECTION — CONSUMER CREDIT CARD MARKET REPORT

providing them the opportunity to reroute communications and potentially access other 

financial products and services at the financial institution without the consumer’s knowledge.

Traditional fraud models attempt to pinpoint fraud by checking a single transaction against a 

number of rules that result in a pass/fail decision. For example, if a transaction is above a 

certain threshold or made in a foreign country, it might be flagged as fraudulent. These rules 

have been easy for fraudsters to learn and evade. In addition, the traditional model’s rigidity 

caused a substantial number of non-fraudulent transactions to be denied. One source estimates 

that 70 percent of transactions that were declined due to fraud were false positives.326 These 

false positives cause issuers and merchants to lose out on authentic sales and customer loyalty.

Issuers and payment networks are investing in more adaptive technologies and strategies to 

better combat fraud loss. Important developments include the following: 

• Machine learning: Unlike the system of rigid decisions in traditional fraud detection, 

machine learning systems can adapt more quickly to variations in data, learning to better

identify fraudulent transactions over time. Machine learning fraud prevention efforts use 

thousands of individualized data checks on any one transaction to increase the likelihood 

of accurately identifying a fraudulent or permissible payment.327

• Dynamic CVV: If a credit card’s card number, expiration date, and CVV code have been 

collected, a fraudulent card-not-present transaction is difficult to prevent. At least one 

 

326 Al Pascual, The Financial Impact of Fraud: Merchants Challenged as E-commerce Fraud Rises Post-EMV, 

Javelin (Oct. 25, 2016), available at https://www.javelinstrategy.com/coverage-area/financial-impact-fraud. 

327 As with underwriting, the use of AI for fraud control raises concerns of unintentional bias, which can affect 

consumers through declined transactions and closed accounts. Rob Matheson, Reducing False Positives in Credit 

Card Fraud Detection, MIT News (Sept. 20, 2018), available at http://news.mit.edu/2018/machine-learningfinancial-credit-card-fraud-0920. See also Penny Crosman, Can AI’s ‘black box’ problem be solved?, American 

Banker (Jan. 1, 2019), available at https://www.americanbanker.com/news/can-ais-black-box-problem-besolved.
190 BUREAU OF CONSUMER FINANCIAL PROTECTION — CONSUMER CREDIT CARD MARKET REPORT

issuer is experimenting with dynamic CVV codes on credit cards which will refresh 

periodically, rendering previously gathered card information inaccurate.328

• 3D Secure 2.0: 3D Secure was developed by the major card networks in 2001 as an 

additional layer of fraud protection. The 3D Secure process requires consumers to take 

steps to authenticate themselves in the course of a transaction. This process has 

contributed to increases in cart abandonment as consumers are routed through 

additional authentications steps. 3D Secure 2.0 is being introduced in 2019 and includes 

multi-platform digital support, additional contextual data share between merchants and 

issuers, and a more frictionless authentication experience.329

• Secure Remote Commerce (SRC): An additional joint card network effort, SRC is a stilldeveloping standard for card payments in digital commerce. The approach would do 

away with the current standard of inputting card credentials, a commonly-cited friction 

point in the payments process. SRC is focusing on interoperability, raising the possibility 

that consumers may someday only interact with one “Pay” button at the digital point-ofsale that can accommodate many types of payments.330 Merchants have raised concerns 

that SRC requirements will lead higher shopping cart abandonment and could limit 

merchants’ transaction-routing choices.331

 

328 PNC, Innovation in Fraud Protection, https://www.pnc.com/en/corporate-and-institutional/treasurymanagement/resources/payment-solutions-news/innovations-in-fraud-protection.html (last visited June 27, 

2019). 

329 See Visa, FAQ: Visa 3-D Secure 2.0, https://technologypartner.visa.com/Download.aspx?id=681 (last visited 

June 27, 2019). 

330 See EMVCo, EMV Secure Remote Commerce, https://www.emvco.com/emv-technologies/src/ (last visited July 

19, 2019). 

331 John Stewart, Networks Say SRC Will Go Live Later This Year to Simplify—And Secure—Digital Checkouts, 

Digital Transactions (June 7, 2019), available at https://www.digitaltransactions.net/networks-say-src-will-golive-later-this-year-to-declutter-and-secure-digital-checkouts/. 
191 BUREAU OF CONSUMER FINANCIAL PROTECTION — CONSUMER CREDIT CARD MARKET REPORT

APPENDIX A: SUPPORTING FIGURES

AVERAGE APR, GENERAL PURPOSE (Y-14+)

AVERAGE APR, PRIVATE LABEL (Y-14+)

Superprime Prime Near-prime Subprime Deep subprime Overall

0%

5%

10%

15%

20%

25%

2015 2016 2017 2018

Superprime Prime Near-prime Subprime Deep subprime Overall

0%

5%

10%

15%

20%

25%

2015 2016 2017 2018
192 BUREAU OF CONSUMER FINANCIAL PROTECTION — CONSUMER CREDIT CARD MARKET REPORT

FEDERAL FUNDS RATE COMPARED TO WSJ PRIME RATE(WSJ,FEDERAL RESERVE)332

AVERAGE QUARTERLY CREDIT LINE DECREASE INCIDENCE, GENERAL PURPOSE (CCP)

 

332 Fed. Reserve Bank of St. Louis, Effective Federal Funds Rate, https://fred.stlouisfed.org/series/fedfunds (last 

visited June 13, 2019); Wall St. J., Market Data Center, https://www.wsj.com/market-data/bonds/moneyrates

(last visited June 13, 2019).

0%

2%

4%

6%

8%

10%

2001 2003 2005 2007 2009 2011 2013 2015 2017 2019

WSJ Prime Rate Federal funds rate

0%

1%

2%

3%

4%

5%

Superprime Prime Near-prime Subprime Deep subprime Overall

2015 2016 2017 2018 -- 2005-12 high & low
193 BUREAU OF CONSUMER FINANCIAL PROTECTION — CONSUMER CREDIT CARD MARKET REPORT

AVERAGE QUARTERLY CREDIT LINE DECREASE INCIDENCE, PRIVATE LABEL (CCP)

MEDIAN CREDIT LINE DECREASE AMOUNT, GENERAL PURPOSE (CCP)

MEDIAN CREDIT LINE DECREASE AMOUNT, PRIVATE LABEL (CCP)

0%

2%

4%

6%

8%

10%

Superprime Prime Near-prime Subprime Deep subprime Overall

2015 2016 2017 2018 -- 2005-12 high & low

$0

$1,000

$2,000

$3,000

$4,000

$5,000

Superprime Prime Near-prime Subprime Deep

subprime

Overall

2015 2016 2017 2018 -- 2005-12 high & low

$0

$500

$1,000

$1,500

$2,000

Superprime Prime Near-prime Subprime Deep

subprime

Overall

2015 2016 2017 2018 -- 2005-12 high & low