Over the last few weeks, we’ve covered some stories outlining how major issuers like Amex and Chase are tightening their belts. Chase’s most recent financial results indicate that this trend may continue for a much longer time than expected. What does this mean for those looking to apply for a Chase credit card? It could well mean lower odds and more restrictions for approvals and lower credit limits.
Chase Credit/Debit Card Sales
Chase’s most recent results from the second quarter paint a grim picture. The data shows a slight recovery in the restaurant and retail category. However, overall spend continues to remain depressed. The report highlights the fact that Chase’s overall debit and credit card sales volume fell by 23% YoY. The chart below depicts how the numbers have steadily dipped. The very last row at the bottom represents debit and credit card sales volume.
During their most recent investor call, Chase executives seemed cautious when asked about their outlook for the next quarter. However, if you read the entire transcript, you’ll figure out that the outlook doesn’t look all that great. JP Morgan CEO Jamie Dimon outlined his overall outlook for the next quarter during the call.
We cannot forecast the future. We don’t know. We’re also very clear that, I know at least I think, you’re going to have a much murkier economic environment going forward than you had in May and June, and you have to be prepared for that. You’re going to have a lot of ins and outs. You have people that’s scared about COVID. They’re going to be scared about the economy, small businesses, their companies, bankruptcies, emerging markets. So it is just going to be murky which is why if you look at the base case, an adverse case, an extremely adverse case, they’re all possible and we’re just guessing at the probabilities of those things; that’s all what we’re doing.
On the consumer side, we like other banks you’ve seen are kind of prudent and tightening up with how you do credit. That’s already happened and obviously you can do some more.
The Pundit’s Mantra
Banks, just like other businesses are simply responding to existing market conditions. I won’t be surprised if other card issuers follow a similar path. Banks will continue to remain gun shy and offer lower credit limits and tighten up card approvals. Similarly, we’re already seeing data points showing how Chase is only approving customers who have a Chase business banking account for their small business credit cards.
I haven’t applied for a credit card for the last few months, let alone a Chase card. I have a sufficient chunk of miles and points to use right away after travel returns to normal. Therefore, I plan to sit out and wait for better sign-up bonuses and lower card application restrictions to return.
Have you applied for a personal or small business Chase card recently? What was your experience like? Tell us in the comments section.
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