Americans ask credit cards at a rate not seen since before the pandemic.
Nearly 27% of U.S. consumers in October said they had applied for a credit card in the past 12 months, according to the Federal Reserve Bank of New York. This is the highest level since 2019 and well above the record 16% recorded a year ago.
Data from the New York Fed does not take into account the new variant of the Omicron coronavirus, which could delay people’s travel plans and worsen supply chains. But the rebound in appetite for credit cards in early fall suggests consumers may continue to stimulate economic recovery in the United States.
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âA lot of things are slowly returning to more normal times,â said Wilbert van der Klaauw, senior vice president of the New York Fed. “With that, you expect credit demand to return to pre-pandemic levels and continue on the same growth path.”
Demand for credit cards and other loans plummeted in the early months of the pandemic. Americans unsure of their finances fear of incurring new debts. The restrictions on meals and travel meant people didn’t have a lot of places to spend money anyway.
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Things started to change earlier this year after Covid-19 vaccines boosted the U.S. economy. More Americans, after a year of decline, have started sign up for new credit cards.
The increase in demands does not guarantee bigger profits for the lenders. While people ask for more cards and spend more when they get them, they are also paying off their balances faster than before the pandemic.
Banks charge interest on carried over balances from month to month. Credit card balances remain $ 123 billion below their end-2019 level, according to the New York Fed.
Lenders are working to get more people to sign up for cards, hoping that more registrations will translate into more card spending and more people with balances.
Banks were send more card offers and attract future cardholders with generous rewards. They also ease borrowing needs. Some banks reported lower credit score requirements on credit cards in the third quarter, according to the Federal Reserve.
Americans also want to borrow more from their existing cards. More than 11% of U.S. consumers said in October that they had requested an increase in their credit limit in the past 12 months, down from around 7% a year ago.