Consumer Payment Card News

Credit Card Saturation Hits 37K Miles of Plastic in July

Credit Card Saturation

Credit cards saturation in the U.S., by most measurements, was reached in the first three months of this year. As of April 1, 2019 there were 694 million general purpose credit and charge cards carrying the Visa, Mastercard, American Express or Discover brand, in-force. It is projected the 700 million milestone will be passed by July 1st.

It takes 18,800 cards laid end-to-end for a mile. The number of major credit/charge cards currently in-use, laid end-to-end tabulates to more than 37,000 miles of plastic, almost enough for four roundtrips between New York to Honolulu.

Credit Card Math

There are about 329 million total Americans, including 247 million adults (over 18). Simple math computes to 2.1 credit and/or charge cards per U.S. person (man, woman, child) or 2.8 credit and/or charge cards per American adult. Considering approximately 128 million U.S. households, the average becomes 5.4 cards per family according to figures gathered by CardData.

A general purpose credit card is a universally accepted card linked to a revolving line of credit and is generally subject to interest charges if the balance is not paid-in-full by the monthly payment due date, or in some cases, by the monthly closing date. A general purpose charge card is a universally accepted card requiring payment-in-full by the payment due date or closing date. It is sometimes referred to as a 30-60 day credit card. There are also hybrid credit/charge cards, offering cardholders the option of paying some transactions as a charge card and other, generally non-recurring large expenses, with a line of credit.

The average number of credit/charge cards per person, per adult and per household is an eye-opener, drilling down further is an eye-popper.

Un-Credit-Carded Americans

About 10% of adult Americans, or 25 million, have credit scores so bad it would be a compliment to say they have “poor” credit. “Poor” credit is defined as a consumer with a FICO below 580 or 550. In fact many issuers of secured (requiring a cash deposit) credit cards will not issue such cards to someone with a FICO below 500. Additionally, there are approximately 45 million American adults, or about 18%, with no credit score or credit history, sometimes referred to as “unbanked” Americans.

The numbers are consistent with industry figures showing consumer credit card market penetration among households in the U.S. of 72% and debit card penetration running about 83%, according to RAM Research. While major branded prepaid card penetration can theoretically be 100% across all Americans of any age, the prepaid card data are sketchy at best.

Average Credit/Charge Cards

Based on the figures noted above, the average number of American adults with a credit or charge card computes to 3.9 cards.

To complicate the arithmetic further is the fact there are approximately 1.2 credit/charge cards per account representing a joint accountholder or an authorized user. Commercial credit/charge cards are also included in the total number, or about 20 million. By the way, retail credit cards (store, gas, etc) are another animal not in this equation notes Robert McKinley, Senior Analyst for CardTrak, CardFlash and CardData.

Best current guesstimate: the average numbers of general purpose credit/charge card carrying the Visa, Mastercard, American Express or Discover brand in the U.S. per adult is four or seven per household.

No matter how you slice or dice it Americans are flush with plastic credit payment options.

Credit/Charge Card Statistics

U.S. credit/charge cards-in-force (CIF) in the first-quarter (1Q/18) for the Major 4 (Visa [V], MasterCard [MA], American Express [AXP] and Discover [DFS]) was up 5.2% year-on-year (YOY), compared to 2.3% YOY growth in the prior year. At the end-of-the-period (EOP) for 1Q/19, there were 693.9 million U.S. credit/charge CIF compared to 688.5 million for 4Q/18, and 659.5 million for 1Q/18, according to CardData.

Among the Major U.S. credit/charge card brands, Mastercard added 27 million over the past 12 months, while Visa added three million CIF, American Express added 2.8 million CIF, and Discover added 1.6 million CIF, according to RAM Research.

Compared to prior years the Major 4 U.S. networks grew by 5.2% YOY at 1Q/19 EOP; 2.3% YOY at 1Q/18 EOP; 0.1% YOY at 1Q/17 EOP; and 4.2% YOY at 1Q16 EOP. Robert McKinley, Senior Analyst for CardData, notes the Major 4 credit/charge CIF is growing at a 2.94% five-year CAGR (compound annual growth rate).

Source: Visa; Mastercard; American Express; Discover; Experian; RAM Research; CardData; CardTrak; CardFlash