Credit card

Customers are ready to increase their credit card borrowing

After a period of weak loan demand, lenders say Americans have paid off balances accumulated during the COVID-19 pandemic and are ready to start borrowing larger amounts again.

Credit card lenders have seen signs that the heavy burden on depositors is easing with the help of government debt relief programs and stimulus payments. After a period of weak demand for loans, banks are now eager to lend money and finally make a profit.

“While the payment rate is still very high, it has come back down from its peaks and the revolving balances have stabilized. And when we look inside our data, we see evidence that excess deposits are starting to normalize in segments of the population that traditionally spin. Therefore, we are optimistic about the prospects for growing revolving card balances, ”said Jeremy Barnum, CFO of JPMorgan Chase, in an earnings call this month.

JPMorgan Chase predicts faster loan growth in the future, as their credit card users who took out loans before the pandemic now drain their savings faster than other customers.

Synchrony and Discover, which focus on credit cards for customers with low credit scores, have also noticed a positive change. Bank of America reported a similar trend, with a slightly increased number of customers carrying balances on their credit cards.

While all lenders expect payment rates to continue falling, it will likely take more than a year for rates to return to where they were before the pandemic. Another notable trend is a marketing war between card lenders. Banks are currently scrambling to offer rewards and promotional offers in an attempt to attract customers.

Finally, after a pandemic-induced collapse in demand for balance transfer offers and personal loans for debt consolidation, customers are once again trying to alleviate their debt by making use of these offers.

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