Report: Amid Stubbornly High Inflation, Consumers Turn to Credit Cards, Home Equity to Maintain Stability

CHICAGO (Globe Newswire) — Amidst an economic environment of rising interest rates and high inflation, the fourth quarter of 2022 saw consumers continuing to look to credit as a means to help stave off these financial pressures. TransUnion’s newly released Q4 2022 Quarterly Credit Industry Insights Report shows that whether it’s Gen Z consumers opening credit cards, homeowners taking out home equity lines of credit (HELOCs) or consumers continuing to turn to unsecured personal loans, more and more borrowers are looking to a range of credit products to cope with the financial pressures of today and better position themselves for the evolving financial landscape.

“Whether it’s shopping for a new car or buying eggs in the grocery store, consumers continue to be impacted in ways big and small by both high inflation and the interest rate hikes implemented by the Federal Reserve, which we anticipate may continue for at least a few more months,” said Michele Raneri, vice president of U.S. research and consulting at TransUnion. “If more moderated rate hikes continue, it would be a good sign that the increases have been working, and that some relief from high inflation may be on the horizon. Until then, we fully expect consumers to continue to look to credit products such as credit cards, HELOCs and unsecured personal loans to help make ends meet and put themselves in stronger financial standing moving forward.”

An example of increased credit usage: credit card balances continued to grow, reaching record levels at the end of 2022. Bankcard originations were also up year-over-year (YoY) in Q3 2022 (the most recent originations data available), from 20.1 million in Q3 2021 to 21.6 million. Gen Z consumers, in particular, increasingly continued to turn to bankcards, showing YoY growth in both balances (up 64% YoY in Q4 2022) and originations (up 18.8% YoY in Q3 2022). Somewhat concerning is an upward trend in credit card delinquencies in both bankcard and private-label; however, context is required. Delinquencies for bankcards in Q4 2022 are still hovering around pre-pandemic levels observed in 2019 while private label card delinquencies remain below pre-pandemic levels.

While higher interest rates dampened new and refinance mortgage originations in Q3 2022, homeowners continued eagerly tapping into their record stores of home equity to help in consolidating their high interest debt. In fact, the most recent origination figures from Q3 2022 show that HELOCs and home equity loans (HELOANs) continued to be a popular option in Q3 2022. Consumers are also still seeking out unsecured personal loans as a way to pay off high interest debt and, despite growing delinquency rates among borrowers, lenders remain eager to lend, albeit seemingly with adjustments in their lending criteria that includes a gradual shift away from below prime borrowers.

Consumers Turned to Credit Cards, HELOCs and Unsecured Personal Loans in 2022

Key MetricsQ4 2022Q4 2021
Total Credit Card Balances (Bankcard)$930 billion$785 billion
Number of Credit Cards (Bankcard)518.4 million485.9 million
Number of HELOC Originations (Q3 2022)*405,646286,925
Total Unsecured Personal Loan Balances$222 billion$167 billion
Source: TransUnion