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Credit cards: Given and taken

By Janna Herron ·
Monday, June 4, 2012
Posted: 5 pm ET

Americans feel better about getting new credit cards, while lenders feel better about giving them out. That's the takeaway from Experian's latest "State of U.S. Credit Market" report.

Bankcard originations, in dollar terms, rose by 30 percent year-over-year in the final quarter of 2011 from the same period in 2010, the report released last week showed. Total volumes hit $62 billion in the period, the highest since the fourth quarter of 2008.

Earlier Experian studies showed strength in auto lending appearing in late 2010 and into last year, but Americans, especially those with tip-top credit score, were holding off on adding new credit. On the other hand, lenders remain jittery about extending credit to consumers with spotty credit.

"We were waiting for this to happen," says Linda Haran, the author of the report. "We're now seeing a happy story where consumers are thinking about taking on new credit and lenders are starting to go down the risk spectrum cautiously."

Both groups seem to feel more confident about the economy, despite a still lackluster housing market, and are open to taking some guarded risks. For example, even though the riskiest consumers are getting credit card offers, they still make up only 1.2 percent of overall originations, says Haran.

The very best credit risk consumers make up around 37 percent, while B-grade credit consumers (those with a VantageScore between 801 and 900) account for 35 percent.

For any consumer looking for a new credit card, don't make a hasty decision. Compare cards: Look specifically at annual fees, interest rates if you are a revolver (though I strongly suggest you pay off your balances every month), rewards programs and penalty rates and fees. Find one that matches your financial lifestyle, such as an airline card for a frequent flier.

Have you gotten a new credit card lately?

Follow me on Twitter: @JannaHerron.

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1 Comment
June 05, 2012 at 7:25 am

Can anyone explain why someone would even want a debit card? They are fraught with dangers. I use a credit card to purchase virtually everything from gas to groceries. I pay the card off every month, even putting a $7000 car on my card to pay for an auto I bought at auction. I actually make money by using this card; $150 so far this year. If I'm not paying the CC company any interest, why not use a CC instead of a DC? I'm using the CC card companies money; fee-free for at least a month and I'm pocketing money I make with the purchases! Why would anyone want to use THEIR OWN money when you can use a CC card without worries?