Card Issuers Preparing For Post-Pandemic Recovery
Banks are expecting a significant revenue increase as the United States government gradually reduces COVID restrictions and stops issuing stimulus checks for the time being. These changes mean that US citizens are likely to return to relying on their credit cards, which are among the most profitable products that banks offer.
Last year, lenders took several precautions, such as stopping certain card offers and reducing card limits, to protect themselves from the potential losses they feared they would suffer due to the sudden spike in the unemployment rate. However, thanks to record savings and the COVID-19 Economic Relief plan, many card users were able to keep their credit card debt low and obtain funds from alternative sources.
Now that consumers have more opportunities to exercise their purchasing power, banks are trying to make up for the missed earnings from 2020. They are rolling out numerous new promotions and even lowering their credit requirements, meaning that customers can now get an excellent card with a 600 credit score. On the other hand, the annual percentage rates have remained high: The average rate is 16%.
With the lockdown restrictions beginning to lift, card issuers are counting on people going back to eating in restaurants, traveling, and attending events. Activities such as those are particularly lucrative from the banks’ perspective, because they prompt people to get reward credit cards, whose demand has dramatically decreased since the start of the pandemic.
The banks that have made the biggest effort to re-expand their customer bases are Capital One, Citigroup, and JPMorgan. Aside from sending out millions of offers, these banking giants have also created very determined social media campaigns.
All of this has developed a very competitive atmosphere among lenders; borrowers can therefore expect to see more and more enticing credit card opportunities for a while yet.
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