A new survey by the Federal Reserve shows that banks have been more willing to approve credit card applications during the first quarter of this year, but it seems unclear if it is actually a consumer demand for them.
The Federal Reserve’s latest survey of senior loan officers, which is a quarterly poll of U.S. Banks in regard to lending practices, credit card issuers were much more likely to approve credit card applications in the first 3 months of 2011 than they had been previously.
Mintel Comperemedia tracks credit cards mailings, and senior vice president Andrew Davidson said,
We’re definitely seeing more and more offers going to households.
However, there appears to be some mixed signals when it comes to demand from consumers. The Fed report stated that “demand was little changed for credit card loans” during the early months of 2011, actually showing a decrease of around 3%. However, when the survey asked about new credit cards and existing credit lines combined respondents said demand had increased substantially.
The conflicting results seem to show that consumers are not really seeking new credit card accounts, instead they want larger credit lines on the existing credit card accounts they hold.
The report also shows that 20.5% of banks reported easing the standard they use for approving credit card applications. This means it is now easier than ever before to obtain a credit card. Some of the other pieces of information which came up in answers regarding terms and conditions changes were that approximately 6% of banks increased credit card limits for new or existing customers and 2.9% lowered them.
The number of banks increasing interest rates on new or existing cards was equal to the number who decreased them at 9%. In the most telling point of all, 6% of banks lowered the minimum requirement for credit scores required to obtain a credit card and none of the banks increased the minimum credit score.
Ten percent of banks also said that the overall credit rating of applicants for new credit cards, or extended credit lines on existing cards is improving. This points to consumers with higher credit scores, stronger household incomes, and an increase in the number of low risk borrowers.
Overall the survey seems to bring good news to consumers who are seeking credit. As the economy continues to recover it is becoming much easier to obtain a credit card.