December 2nd, 2009
Credit Scores Rise With Uptick in Retail Card Balances
Consumer credit scores are on the rise at the start of the busiest spending season of the year. Credit Karma user data from October reveals that retail credit cardholders are doing something right: while the average credit score of Credit Karma users with retail cards we follow increased 5 points to 698 in October, the average credit score of all Credit Karma users actually dropped one point to 671 in October. We saw a very slight uptick of $23 in balances on retail cards in October, possibly a sign that holiday shopping is starting early this year.
Many economists are predicting conservative holiday shopping at best, but we’re seeing some early movement in balances at upscale department stores, like Bloomingdales and Nordstrom, which experienced the largest average increase of $168 in cardholder balance in October. Retail clothing chains, including Banana Republic, J Crew, and Old Navy, had almost unnoticeable changes in average balances, increasing in October a mere $15.
Consumers pared back balances in usually popular gift electronic and jewelry categories by $48 and $20 respectively. Smaller balances in these categories may indicate that there will be less big ticket items under the Christmas tree—like a new HD TV for Dad or a diamond tennis bracelet for Mom—in favor of more modest gifts like a sweater or scarf from the gift receiver’s favorite department or retail store. Yet, it may also mean last-minute big ticket purchases are yet to come.
Key Retailers’ Credit Card Metrics
|
Average Card Balance in Oct
|
Average Credit Limit in Oct
|
Average Credit Score in Oct
|
|
|
Upscale Department
(ex. Bloomingdales, Nordstrom) |
$869.28
|
$1,748.37
|
708
|
|
Discount Department
(ex. Target, Kohls) |
$696.03
|
$1,470.40
|
688
|
|
Retail Clothing Chain
(ex. Banana Republic, J Crew) |
$340.84
|
$816.28
|
697
|
|
Electronics
(ex. Best Buy, Amazon) |
$806.72
|
$1,847.90
|
700
|
|
Home and Hardware
(ex. The Home Depot, Sears) |
$1,458.30
|
$4,269.76
|
712
|
|
Jewelry
(ex. Zales, Kay Jewelers) |
$949.07
|
$2,416.10
|
666
|
|
Average Across Categories
|
$853.37
|
$2,094.80
|
695
|
Source: www.creditkarma.com, October 2009
Be Credit Conscious
As the holiday season pulls in this year, the National Retail Federation predicts consumers will spend on average $682 on gifts, decorations, and food. While consumers at these key retailers may not be drastically cutting their credit use or overspending, it appears they are otherwise taking other steps to improve their credit scores—by paying on-time, opening more credit lines, paying down debt, or other credit-healthy actions. Most consumers seem to be headed for the nice list rather than the naughty list when it comes to shopping behavior, and getting rewarded with healthy scores for their good credit habits.
At Credit Karma Blog, what goes around comes around… So what do you think about this post? Agree, disagree, or have something more to say? We’d love to hear your reactions!
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