In recent months, consumers have made continual improvements to the way they handle their credit card debt while still increasing the amount they’ve borrowed on those accounts, and experts believe that could prompt lenders to grant more new cards to would-be borrowers.
Financial experts are now saying that the combination of increased credit card use among consumers and continually dropping rates of both delinquency and default in the last few months will probably be enough to encourage lenders to increase card distribution efforts in the new year, according to a report from The Associated Press. However, they also caution that lending isn’t likely to reach the levels seen in the run-up to the recession any time soon.
The charge off rate in particular may be the driving force behind lenders’ increased efforts to issue more cards in the coming months, and even as some have seen their in-house rates increase in November, there some optimism that rates could continue to fall industry-wide, the report said. These improvements is on top of the already near-historic lows currently being observed, and some experts believe the rate could drop below 4 percent sometime next year.
Meanwhile, some analysis firms say the new trend may already be under way, the report said. Statistics from the credit monitoring firm TransUnion suggest that more than 250,000 new credit cards were issued between June and September to moderate or even subprime borrowers as lenders tried to expand their client base. Other stats from the company had previously shown that more than 8 million people were flushed out of the borrowing system during and immediately following the recession for various reasons.
However, the credit card issuers themselves note that while efforts have certainly begun to expand lending efforts, they are likely to proceed with caution, the report said. Discover’s Chief operating officer recently said that one thing that may restrict lenders from really begin granting accounts to those with more troubled borrowing histories is the continued high unemployment rate. Slow economy recovery has also likely put a damper on those efforts.
Lenders significantly cut back on their card issuing efforts during the recession as economic problems caused a far greater number of consumers to fall behind in their efforts to reduce debt and get all their bills paid on time.