Americans Are Applying for Fewer Credit Cards
December 21, 2020
Demand for new lines of consumer credit has fallen during the pandemic, and those who do apply are seeing higher rates of rejection, according to data from the Federal Reserve.
The percentage of households who say they have applied for any type of credit in the last twelve months was down 11% between February and October, falling to just 35%. The percentage of households who said they had applied specifically for credit cards was down 10%, falling to just 16%, the lowest level since the Fed began collecting such data in 2013.
Economists attribute the decline to Americans using stimulus and relief money to bolster their savings and paying down debt, reducing the demand for credit. Credit card balances held by banks in the U.S. have fallen by nearly $100 billion since the pandemic began.
Despite the lack of demand, lenders are becoming more selective and rejecting more applications. Just over 20% of credit card applications were rejected in October, up substantially from February’s multi-year low.