In what might be considered a double-edged sword, the strengthening economy is boosting unsecured debt.
The number of credit-card accounts in the U.S. is rising quickly, thanks in large part to more riskier borrowers gaining access to credit for the first time since the Great Recession.
Ten million new consumers entered the credit-card marketplace in the last year alone, driving the total number of Americans with a balance on at least one credit card to 133 million, according to a recent Industry Insights Report from credit-scoring company TransUnion.
Just over half of the originations came from millennials in their 20s opening their first card. Including those accounts, 60 percent of new customers were subprime borrowers, meaning those with a credit score of 660 or below.
These are also the consumers who were affected the most by reduced lending during the recession and are gaining access to credit once again.
"The credit-card industry is very competitive," said Bill Hardekopf, credit card expert and CEO of Lowcards.com. "Issuers are always looking to gain new card holders, but most of the prime people — those with good credit and excellent credit — have credit cards. The subprime people are the ones that had their accounts closed during the economic downturn. That's where the greatest growth potential is now."