Until recently, the number of Credit cards in circulation was increasing annually. According to Industry Insights’ quarterly report from Q4 of 2016 however, this trend is reversing quickly. In fact, there were 800,000 fewer credit cards in use in 2016, a significant decrease. Oddly enough though, the total Canadian balance did increase by 3.3%. Here’s how industry experts are explaining the strange phenomenon.

Reward Programs to Foster Loyalty

According to the analysts, higher debt with fewer cards in circulation translates to people signing up for fewer credit cards, but actually using the ones they already have more frequently. This closing in of financial outlets could be seen as a positive turn for consumers. With customers signing up for fewer cards, companies will need to increase incentives to keep their customers from switching to a competitor with better benefits.

With higher spending producing greater balances on fewer cards, credit limits are breaking new heights as well. TransUnion a credit card monitoring agency in Canada, suspects that limits will continue to rise as brand loyalty increases.

Are Demographics Painting a Skewed Picture?

Before credit card companies start reorganizing their entire business model, however, a few things should be noted: The data is slightly unbalanced due to the difference in demographics. Millennials, for example, have a tendency to use debit cards more often than credit. The older generation, on the other hand, appreciates the benefits of card loyalty schemes, and therefore utilizes these plans more often. Still, more benefits such as air miles or vouchers are helpful for the industry and an obvious incentive for people to sign up or use those cards.

Maintaining Financial Responsibilities Throughout This Flux

Of course, just because you can spend more doesn’t mean you should. As always, consumers should keep their spending habits within a reasonable budget and not exceed their means simply because the credit limit allows it.

This is particularly true considering the fact that the studies have shown that consumers who pay at least the minimum monthly payment (if not more) have a greater likelihood of staying away from delinquency (like late fees). Overall delinquency rates had a slight increase, while non-mortgage rates actually decreased. Generally speaking, this was a good year for consumer credit according to the Insider Insights report.

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