Credit Cards Applications Hit Pre-Pandemic Levels

In the past 12 months, nearly 27% of the US consumers applied for a credit card, according to the New York Federal Reserve. This marks the highest rate of applications since before the pandemic. 

The figures are much higher than the record low of 16% recorded last year. But even though there are more applications, credit card balances remain $123 billion lower than they were at the end of 2019. 

The data collected by the New York Fed doesn’t account for the Omicron variant, which is fuelling fresh fears about a new surge in coronavirus cases and another potential economic downturn.

Nevertheless, the growing demand for credit cards suggests consumers could help drive the US economic recovery. The demand for loans is stabilizing compared to the early months of the pandemic when Americans were uncertain about their finances and avoided taking on debt.  The introduction of the vaccines helped alleviate some of those concerns.

Lenders started sending out more credit card offers with sign-up bonuses and lucrative rewards in a push to increase card spending and the number of consumers carrying balances. Banks also eased borrowing requirements and lowered credit-score requirements, prompting those with lower credit scores to apply.

According to a New York Fed press release, “households anticipate they will be more likely to request credit extensions for all credit types (mortgages, credit cards, credit card limit increases, auto loans) except for mortgage refinancing. On average, consumers reported that they expect to be less able to cover a $2,000 emergency expense, while also reporting that the probability of them needing $2,000 for an unexpected expense increased somewhat.”

The New York Fed also notes that mortgage refinance applications have started to subside following their dramatic rise throughout the middle of 2021, while the acceptance rates decreased slightly this year.