In the United States, lenders are giving out more credit cards than ever before, and a growing share of them is targeting consumers with lower credit scores.
According to a report by TransUnion, the credit reporting agency, a record 196 million Americans had cards at the end of 2020.
According to the latest figures for the third quarter of the previous year, which is the one that indicates the most recent in detailed figures, the number of new cards issued reached an all-time high of 20.1 million, and about 9 million of them went to so-called subprime borrowers, which are those with poor or fair credit.
Lenders want to take advantage of the fact that consumers are eager to take advantage of the fact that they have been able to meet their obligations after the stimulus programs ended economic pandemics last year.
With marketing campaigns and promotions, credit card issuers want to attract customers, even though interest rates charged on cards were at record highs last year compared with risk-free rates on Treasury debt.
Still, cardholders remain cautious about their new loans, and the average balance per borrower changed little from a year ago in the fourth quarter, at $5,127 dollars, and remained well below pre-pandemic levels, TransUnion noted.
Yellow lights come on:
Issuers seem unaware that unless loan payments student loans are forgiven or suspended once again, millions of Americans will have to meet those loan obligations in May, when the forbearance period ends.
Americans spend hundreds of dollars on student loan payments each month, forcing many households to make budgeting decisions about their biggest debts.
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