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The news: Credit card application rejections rose in October compared with a year ago, according to the Federal Reserve Bank of New York’s latest Survey of Consumer Expectations (SCE) Credit Access Survey.
The application rate for credit cards totaled 29.0% in October 2023, up from both 27.1% a year ago and the pre-pandemic 27.2% in October 2019.
The average rejection rate for credit card applications, meanwhile, increased by 1.1 percentage points to 19.6% over the same time period. Rejections were down from 21.5% in June 2023.
Credit limit increase applications fared better: While the application rate increased, rejections declined to 30.9% in October 2023, from 35.3% a year ago.
Why it matters: Issuers are tightening credit standards for new card applications in anticipation of economic turbulence.
Almost 29% of US domestic banks tightened standards for credit card loans in Q4 2023, per the Federal Reserve.
This will likely make it more difficult for riskier consumers to get approval for credit cards.
The bigger picture:Total US credit card account openings are projected to total 34.8 million in 2024, up 5.2% year over year (YoY), per our forecasts. This is a deceleration from a 7.6% increase this year.
Despite recessionary fears and shifting generational behaviors, credit card account openings will remain positive thanks to factors like digital innovations, which are converting more consumers into cardholders.