A survey of senior loan officers by the Federal Reserve that was released on Monday showed that credit card lending has started to loosen up a bit after 3 years of freeze. 8% of the banks said that they have made their lending standards less stringent during the second quarter this year while none of the banks have made the standards any more stringent than what they were. This finally ends a 11 quarter stretch of continuous tightening of credit lending standards that started way back in 2007 and had reached its peaks during the gloomiest conditions of the economic recession in the recent times.
Various other types of consumer loans have also been made more available with a net 13.2% of those surveyed responding that the lending standards have been eased. However, all the credit card holders are not enjoying free flowing credit. Most of the current card holders according to the Fed survey still find credit hard to come by. The stringent bank lending translates in a way to higher interest rates, higher minimum credit score requirements and lower credit limits on approvals of new credit card accounts. Amidst the challenging economy along with the restrictions imposed by the Credit CARD Act of 2009, banks have not been coming forth to lend. During the depths of recession in the second quarter of 2008, as many as 66% of the banks said that they had tightened the lending standards.
These finding came as part of the surveys conducted by the Fed with the banking executives about changes in the demand and supply of loans for domestic as well as commercial reasons. According to the latest survey from the Fed 7.9 percent of the banks reported that their standards for approving credit card applications have improved while a majority of them said that their standards have remained unchanged. It has been found that banks are indeed increasing the number of card offers to households in US. As many as 640.3m million credit card offers were received during the second quarter alone which is up by a whopping 83% from the number at the same time last year. As a result most of the credit card issuers had a need to provide further incentives owing to the great competition. The reports also show that not only are customers receiving more card offers, they are also receiving far better offers due to which some of the borrowers can take good advantage.