Over the last few weeks, we’ve seen card issuers respond to the changing market conditions. Amex and Chase have publicly stated their intent to slow down credit card approvals. In fact, Amex is also proactively closing accounts of customers for lack of activity. However, Amex hasn’t specified how they ascertain that an account is inactive.

Credit Card Approvals

The Balance reports that banks are indeed tightening lending practices in response to the pandemic. The latest Federal Reserve survey data clearly shows what’s going on. The survey aims to measure the level of willingness lenders have to extend new loans or credit. The Federal Reserve survey is conducted quarterly. It aims to track consumer and business loans. For this particular survey, 75 domestic banks, 22 U.S branches and foreign bank agencies contributed their data.

Here are some of the findings:

  • Nearly three-quarters (72%) of all surveyed banks made it tougher to get a credit card, lowering credit limits or raising minimum credit score requirements for new applicants, among other things
  • The survey depicts how banks are tightening credit approval standards across the board, affecting all types of consumer loans
  • More banks are seeing fewer people applying for most types of loans, particularly new credit cards and auto loans
  • While credit card approval terms were the most broadly tightened by issuers, the majority of banks reported stricter approval standards across all major consumer loan types

The Pundit’s Mantra

We’ve seen many data points hint at the fact that easy online approvals for a credit card may not be the norm for a while. Banks are trying to reduce risk by putting in more guardrails before they approve a customer for a credit card.

However, the survey shows a couple of interesting nuggets that buck the overall market trend. Firstly, people are applying consumer loans at a higher clip, especially credit cards and auto loans. Secondly, demand for mortgages also hasn’t dipped, partly due to low interest rates on offer.

Did you apply for a card recently? If yes, did you get an instant online approval or did you have to submit a bunch of documents? Tell us in the comments section.


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Disclosure: The Points Pundit receives NO compensation from credit card affiliate partnerships. Support the blog by applying for a card through my personal referral links. This article is meant for information purposes only and doesn’t constitute personal finance, health or investment advice. Please consult a licensed professional for advice pertaining to your situation