subprime mortgage crisis explained | subprime mortgage crisis case study | what caused the subprime mortgage crisis | subprime meaning | subprime mortgage crisis 2023 | what is a subprime loan | subprime and prime loans | subprime loans threatened the stability of the housing market when home prices
Hey there, folks! Let’s dive into the world of credit cards, where more and more Americans are testing the waters, even if their credit scores are feeling a bit under the weather. Yep, you heard me right. According to a recent survey, a bunch of folks with subprime scores decided to give credit cards a shot last year. But hold on, it’s not all smooth sailing – they had to fork over some extra cash to get their hands on borrowed funds. Let’s break it down in a way that’s easy to digest.
Rising Up with Subprime Scores and Soaring Credit Card Accounts
Buckle up, because this survey has some interesting news. It turns out that during the third quarter of 2022, a whopping 38% of the new credit card accounts were opened by our subprime score friends. That’s a bit higher than the previous quarter’s 36%, and quite a leap from the 31% recorded in the same quarter the previous year. It’s like people with not-so-great credit scores are saying, “Why not give credit cards a chance?”
From Coast to Coast: The Drama of Debt
Let’s talk numbers – specifically, debt numbers. The national average for credit card debt shot up to $7,227, according to the survey. But wait, the debt story isn’t the same everywhere. Some states are dealing with higher debt levels than others. Take Connecticut, for instance. The residents there are carrying the torch for the highest average debt at $9,408 – a solid 30% over the national average. Right behind them are New Yorkers, flaunting their second-place status with an average debt of $9,165. On the flip side, Kentucky wins the prize for the lowest average debt, with residents owing a more manageable $5,408.
Drama Unfolds: A Rise in Missed Payments
Let’s shift our focus to payment troubles. In June, there was a bit of a bump in the rate of missed credit card payments. Early-stage delinquencies went up from 0.71% to 0.82% compared to the previous month. According to the data wizards at VantageScore, it’s not just credit card payments feeling the heat – auto loans and personal loans are also showing some strain when it comes to meeting payment deadlines. Seems like the rising costs of living and debt are teaming up to give our wallets a workout.
Inflation and Credit Card Quandaries
Inflation has been making waves, but not in a good way. The Consumer Price Index (CPI) reported a two-year low of 2% inflation in June. But let’s not kid ourselves – prices are still playing hard to get for many folks out there. While inflation might be behaving somewhat, it’s not exactly making life easier for those of us trying to make our dollars stretch.
The Credit Card Shuffle in June
Guess what? Even with all this financial buzz, June saw a little uptick in new credit card account openings – around 0.24%, to be exact. It’s like people were saying, “Hey, why not add a bit more excitement to the financial ride?”
When Credit Card Applications Hit a Bump
Hold onto your credit scores, because a bunch of Americans got a not-so-warm reception when they applied for new credit cards. A recent U.S. News and World Report survey spilled the tea, revealing that a whopping 46% of them had fair credit scores ranging from 580 to 669. And here’s a shocker – more than a quarter (that’s 25% for you stat fans) were in the subprime zone.
Why the Credit Card Denial Drama?
So, what led to these credit card hopefuls getting turned away? The survey highlighted the top three reasons:
- 31.2% were grappling with credit scores that just weren’t playing nice
- 17% lacked a sufficient credit history (bummer, right?)
- 11.2% may have gone a tad overboard with their credit usage
Second Chances and Credit Card Comebacks
But hey, for those who didn’t take “no” for an answer and decided to give it another shot, here’s what they did differently:
- 26.5% took the smart route by boosting their credit score before trying again
- 25% aimed for credit cards with lower score requirements (way to strategize!)
- 20.6% played it safe with a secured credit card (better safe than sorry, right?)
Navigating the Score Struggle
Here’s a tip – one of the biggest mistakes folks make is reaching for credit cards that demand a higher credit score than they currently have. It’s like trying to squeeze into jeans that are a size too small. The survey had some wisdom to share: focus on credit cards that are in tune with your current credit score. That way, your chances of getting that approval skyrocket.
So there you have it, folks. The credit card world might have its twists and turns, but it looks like Americans are still ready to roll the dice. Just remember, finding the right credit card that matches your financial tune might be the key to success. Stay savvy out there!
FEATURED IMAGE CREDIT GOES TO : Barron’s