The Federal Reserve recently said that 12 percent of banks have loosened their current lending standards for new credit card applicants. This happened for the second consecutive quarter this year following the July-September period.
The Federal Reserves’ latest survey of senior bank loan officers, reveal that they are more willing to approve new applications for credit card accounts this quarter.
For the period of July – September, available data from the Federal Reserve indicates that 12 percent of the entire lenders are large banks, which made their standards in approving credit card applications easier to fulfill.
Financial analyst Jeremy Simon, says these are positive signs for the market since the banks were seen to have imposed stricter standards for new credit card applications prior to the July-September period and for the whole duration of the recession.
Mentel Comperemedia senior vice president Andrew Davidson, said that the credit card industry is now ready to introduce changes after two years of economic vulnerability. He says that in fact, easier credit card applications are now combined with reward systems, credit features and benefits that are here to stay amid the implications of the CARD Act.
Simon, however, points out that though these are the benefits for the new applicants, credit access has been harder for those who have long maintained their credit cards.
Simon adds that those who have previously opened their credit card accounts in banks whose overwhelming majority did not loosen their credit card application standards, are now facing costly credit access.
There are now lower credit limits on the current cardholders and higher interest rates in banks with tighter lending standards – along with the introduction of the CARD Act.
Indeed, Simon affirms that while it has become easier for new applicants to acquire credit cards, it is becoming increasing difficult for the existing cardholders to obtain greater credits.
Simon says that for now, we can surely look at the advantages the new credit card applicants have. After all, the easier standards along with rewards and other benefits for them are fairly favorable to anyone who wishes to apply for credit cards.
More importantly, Simon says that for the current cardholders, what they can think of instead is the way by which they have maintained their accounts with good credit scores and histories for quite some time now. This way, they still have their goals amid the changes.