Fewer consumers are turning to credit cards these days, and more are paying back their balances.
The following post comes from partner site LowCards.com.
According to a FICO survey of bank risk officers released today, the difficulties in the credit card market may continue in the short term.
Nearly 85% of the bankers who manage credit cards expect delinquencies on credit cards to increase or remain the same, while approximately 15% see the delinquencies dropping.
In addition, bankers predict that the reduced lending trends will continue through 2010. 46% of respondents expect approval criteria for credit to tighten while only 14% of those surveyed expect the criteria to be loosened.
Demand remains strong for new credit cards, but cards are harder to get.
According to the survey, the number of new credit cards accounts dropped by 17.7% during the 12 months ending in April 2010 from the previous 12 months.
But the number of inquiries for new credit fell by just 3%. This seems to indicate that consumers could not get all the credit they wanted. During that time, the total amount of credit available on all U.S. consumer credit cards fell by 12.2%.
These numbers show that the industry is still weak and many cardholders are still in financial trouble, but FICO says the figures are an improvement over last quarter. The percentage of all respondents expecting an increase in credit card delinquencies fell from 59% to 42%.
“Banks slashed credit card approvals to minimize their losses, especially to applicants with average or low credit scores. High unemployment and bankruptcies do not create an environment that encourages these loans,” says Bill Hardekopf, CEO of LowCards.com and author of The Credit Card Guidebook.
The FICO Survey of Consumer Credit Trends is a quarterly survey of bank risk professionals. It was conducted in July 2010 with 235 risk professionals in the United States participating.