Research and Statistics

Fed: banks keep tight grip on card loans


Federal Reserve senior loan officers survey says demand for credit cards is greater than supply

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Consumers’ appetite for new credit cards was stronger than banks’ willingness to hand out new accounts in the fourth quarter of 2013, according to the Federal Reserve’s survey of senior loan officers.

In what will be no surprise to disappointed applicants, the survey found that while 19 percent of responding banks said demand for credit cards was “moderately stronger,” only 7 percent eased their standards for approving card applications.

Very few banks reported having changed their standards for approving applications for credit cards,” said the Fed’s report, released Feb. 3.

The quarterly survey, conducted Dec. 31, 2013 to Jan. 14, polled 75 U.S. banks about changes in their standards for consumer loans in the fourth quarter. Of these banks, 57 responded to questions about credit cards.

U.S. banks unclenched their fists more with existing customers than with new applicants, the survey indicated, consistent with the previous quarter. Twelve percent of respondents said they “eased somewhat” their standards on credit limits for cards. Other terms including credit score thresholds and minimum payment requirements remained unchanged at almost all respondents.

The silver lining is that banks expect fewer consumers to have trouble making their payments. Twenty-three percent of respondents said the strength of their card loans is likely to “improve somewhat” during 2014. Only 8 percent said they expect loan quality to “deteriorate somewhat.”

The Fed’s report roughly corresponded with the Office of the Comptroller of the Currency annual look at longer-term credit trends, which found that more banks eased standards for credit cards than tightened them. The OCC report, released last week, found 33 percent of responding banks said they eased card lending through mid-2013, while 13 percent tightened. Most — 54 percent — said their standards were unchanged.

Banks clamped down hard on consumer loans in 2009 and 2010, including largely unsecured credit card loans, the OCC study said. The Comptroller’s “Survey of Credit Underwriting” is based on examiners’ observations and assessments of underwriting standards. The survey, which was released Jan. 30, included 86 large national banks and looked at the 18 months that ended in June 2013.

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