Lending standards of 85% of banks remain,... - Other News

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Credit Card Applications » News » Other » Lending standards of 85% of banks remain, disadvantages seen

Lending standards of 85% of banks remain, disadvantages seen

Lending standards of 85% of banks remain, disadvantages seen
The content is accurate at the time of publication and is subject to change.

The Federal Reserve has recently reported in a survey, that the lending standards of 85 percent of the banks issuing credit cards remain the same.


The overwhelming majority of banks did not opt for changes in their lending standards, even if the other 12 percent of large banks loosened their lending standards and another three percent tightened their criteria for new credit card applications, the Federal Reserve said.


The Federal Reserve said there were apparent disadvantages to existing cardholders whose banks did not opt to loosen their lending standards for the past three months. One of which, is the credit card limit decrease that banks entitle their cardholders. Of the 85 percent of banks with unchanged lending standards, the Federal Reserve says 7.9 percent lowered their credit card limits, while the rest maintained the original amount without a single bank that attempted to increase.


Banks that did not change their lending standards, increased credit card interest rates by 7.9 percent, and the minimum credit scores for a consumer credit card were also raised by 2.6 percent of the.


The Federal Reserve is also quick to point out that large banks were almost all unlikely to extend lines of credit to business cardholders. Small banks offer more opportunities; the Federal Reserve then suggests securing lines of credit more from these small banks.


In the Federal Open Market Committee’s monetary policy made public recently, the Federal Reserve still maintains that tight credit has contributed to the consumers not using their credit cards anymore. The Federal Reserve says other factors include slow growth in housing, wealth, income and high unemployment rate, stalling household spending, etc.


Direct mail-marketing research firm Synovate financial services group director Anuj Shahani, said the reason why it matters for credit cardholders to actively use their cards is because they overwhelmingly contribute to US GDP. He said that with tight credit and other factors taken into consideration, these are major disadvantages to the existing credit card account owners. The consumers need to realize the impact their spending has on the economy once again.


Shahani notes that 70 percent of the country’s GDP is due to consumer spending. This is something he hopes will be apparent in the market, despite the lack of incentives for a lot of credit cardholders to get back at their economic activities.


Shahani concludes that if only the existing cardholders can be given more benefits, then their role in the economy can be better realized.

Disclaimer: This editorial content is not provided or commissioned by the credit card issuer(s). Opinions expressed here are the author's alone, not those of the credit card issuer(s), and have not been reviewed, approved or otherwise endorsed by the credit card issuer(s). Reasonable efforts are made to present accurate information, however all information is presented without warranty. Consult a card's issuing bank for the terms & conditions.
All rates and fees, and other terms and conditions of the products mentioned in this article/post are actual as of the last update date but are subject to change. See the current products' Terms & Conditions on the issuing banks' websites.
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