Over the last few months, we’ve seen credit card issuers make swift moves in response to the changing market conditions. On one hand, they’ve added new features, bonus points categories and benefits. On the other hand, credit card issuers have also made approvals tougher and slashed credit limits. However, this week Chase relaunched their Chase Freedom Card and made improvements to its Chase Freedom Unlimited Card. Many would see these movements as mixed signals. So what’s exactly going on? Are things in the miles and points game getting easier or tougher?

Credit Card Approvals getting tougher

Major card issuers like Amex and Chase have publicly outlined that they’re not actively looking to acquire new customers. This strategy is a direct response to the current public health and economic conditions.

Bloomberg published an interesting article yesterday, outlining how card issuers are themselves split about the strategy moving forward.

On one side, risk-management pioneer Capital One Financial Corp. is reining in credit lines to reduce its exposure. On the other, the nation’s largest card issuer, JPMorgan Chase & Co., is rolling out a new card designed for travelers and diners — the ultimate countercyclical bet.

That’s created an unprecedented situation: Banks know many customers are out of work — but they don’t know who, because so many keep kept paying their bills. The percentage of cardholders behind by 60 days or more actually dropped to 1.37% in July from 1.61% a year earlier, TransUnion data show.

However, card issuers know that customer spend will pick up once the economy gets better. Therefore, cutting credit lines right now may reduce risk, but it can be a double edged sword.

Lenders are usually loathe to lower borrowing limits because it can erode revenue in the future. Instead, some aim to navigate the crisis with a more optimistic posture, enrolling new customers who typically provide two key pieces of information: their current employment and income.

The Pundit’s Mantra

In light of the current scenario, card issuers are being prudent in limiting card approvals and paring credit limits. For example, Chase is requiring customers to have business checking accounts before approval customers for small business credit cards.

However, once market conditions get better, we could well see an arms race to acquire new customers. That would probably be the best time to jump on limited time offers and sign-up bonuses.

What strategy are you employing with regards to credit card applications for the rest of 2020? 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.