Infographic: Issuers stingier with credit post-CARD Act
By Kristin McGrath and Juan Rodriguez
Since the CARD Act went into effect in early 2010, average credit limits are getting lower, and you need a higher credit score to get these more measly limits. That's according to a letter from the American Bankers Association (ABA) filed with the Consumer Financial Protection Bureau.
The Feb. 19 letter tracked data about credit availability between 2007 and 2012. The ABA concluded that, while the CARD Act has reduced surprises such as sudden interest rate increases and has diminished consumer-unfriendly terms, there have been "significant trade-offs," such as higher interest rates, lower credit limits and less available credit, especially for those with lower scores. The act was passed in May 2009, and its major provisions took effect in February 2010.
While the ABA points to the CARD Act as contributing to stingier credit, it's not the only factor. The massive recession, which officially lasted from the end of 2007 to the middle of 2009, also tightened issuers' credit standards. The charts below track the average credit (risk) scores and average credit lines of new credit accounts (accounts open less than 24 months). As the recession took hold, average credit scores increased, as those with lower scores got blocked from new credit. As for credit lines, their downward slide began at the height of the recession and continued until after the Act took effect.
To use the graphic on your site, use the following code:
Published: February 27, 2013
- Volume of credit cards finally back up near pre-recession levels – As of the fourth quarter of 2014, the total number of open credit card accounts, and the volume of new cards being issued, are both nearing the 2008 levels ...
- Survey: Employees less likely to borrow on cards for necessities – A fifth of employees have to borrow on their credit cards to pay for monthly necessities, a study by PwC shows, but overall, workers' financial wellness is improving ...
- NY Fed: Debt in collection shrinks – The percentage of accounts in collections and the average size of those debts both shrank, according to new data from the New York Fed ...