New York Fed: Credit cards defy credit slowdown

Consumer credit demand declined in 2022 with most credit application rates stable or weakening, but a notable exception was a rise in credit card applications, according to the Federal Reserve Bank of New York’s latest Survey of Consumer Expectations Credit Access Survey, released today. The survey, which is fielded every four months, found that the application rates for any type of credit remained below pre-pandemic levels for those with credit scores below 680 but were higher for those with credit scores over 760.

The average application rate for credit in 2022 was 44.8%, down from 45.6% in 2021 and its pre-pandemic level of 45.8% in 2019, according to the survey. Reported rejection rates among applicants was 18%, up slightly from 17.5% in 2021 and 17.6% in 2019. The credit card application rate was an outlier, rising from 26.5% in October 2021 to 27.1% in October 2022. The average rejection rate for credit card applications in 2022 declined by 2.4 percentage points to 18.5%.

Looking ahead to the next 12 months, households anticipated they will be less likely to apply for an auto loan, mortgage or mortgage refinance loan, but reported a higher average likelihood of applying for a credit card or credit card limit increase, according to the New York Fed. At the same time, consumers expect some easing in credit standards, reporting slightly lower average perceived likelihoods of a future credit application being rejected or conditional on applying.