Fed Survey Shows Consumers and Banks Still Cautious on Credit Cards

August 17, 2011, Written By Lynn Oldshue

Credit card late payments and default rates continue to drop, and the Federal Reserve has pledged to keep interest rates at historic lows. But only a small percentage of banks have eased their lending standards on credit cards. In addition, banks report just a moderate increase in consumer demand for credit cards.

These are the major credit card findings of the latest Senior Loan Officer Opinion Survey on Bank Lending Practices released by the Federal Reserve on Monday.

“The Federal Reserve is doing what it can to encourage lending and borrowing, trying to give a positive boost to the economy,” says Bill Hardekopf, CEO of LowCards.com and author of The Credit Card Guidebook. “But consumers and banks are still cautious. Lenders and borrowers seem to be avoiding the risk of additional debt.”

According to the quarterly survey:

* 19 percent of large banks (and 14.3 percent of all banks) see moderately stronger consumer demand for credit cards.

* Credit standards for approving applications for credit cards from individuals or households eased somewhat at 16 percent of large banks and 9.3 percent of all banks.

* The credit limits on new or existing credit card accounts for individuals or households have not changed much at banks. These credit limits have “tightened somewhat” on 17.4 percent of large banks (and 11.1 percent of all banks) but also “eased somewhat” at 13.0 percent of large banks (8.3 percent of all banks). The limits remained unchanged at 80.6 percent of all banks.

* The minimum required credit score remained unchanged for nearly all banks (97.2 percent).

This July 2011 Senior Loan Officer Opinion Survey on Bank Lending Practices is based on responses from 55 domestic banks and 22 U.S. branches and agencies of foreign banks.


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The information contained within this article was accurate as of August 17, 2011. For up-to-date
information on any of the terms, cards or offers mentioned above, visit the issuer's website.