Nearly 50 million credit card customers in the United States said they had their credit limit reduced or their card closed in the past month as lenders scrambled to minimize their risk amid the COVID shutdown -19, a new study has revealed.
The survey, released Monday (May 4) by CompareCards, a division of LendingTree, found that one in four Americans say their credit card terms have been unintentionally changed since the start of the coronavirus pandemic.
“Given the enormous impact of the coronavirus outbreak on the US economy, and in particular the unprecedented spike in unemployment that has occurred in recent weeks, it is not surprising to see banks putting the brakes on their loans,” the study authors wrote. “Something similar happened a decade ago when lenders cut credit limits and closed card accounts at the start of the Great Recession.”
They found that among cardholders, 37% of Gen Z (18-23), 36% of Gen Y (24-39), and 35% of Gen X (40-54) said undergone the changes. That compares to just 8% of baby boomers, aged 55 to 74.
The survey found that 37% of men were three times more likely than women to have their limits reduced. Additionally, 36% of those earning $100,000 or more had their limit reduced or their card closed in the past 30 days, the researchers found.
Perhaps the biggest surprise of all to pollsters was that 41% of Americans were unaware that credit card issuers could lower their credit limit without notice.
Additionally, they found that three in 10 cardholders are using credit cards more than ever, while 42% are using their credit card as before and 27% are using their card less.
While the research lacked data on reducing credit card limits, they estimated that the average limit of $20,000 was likely reduced by thousands of dollars.
CompareCards commissioned Qualtrics to conduct an online survey of 1,039 credit card holders from April 22-24.
A separate to study by CreditCards.com found that 47% of consumers who have credit cards, or about 120 million people, have credit card debt, up from 43% in early March.
Additionally, nearly a quarter of credit card debtors, or approximately 28 million customers, have increased their credit card debt as a direct result of the COVID-19 outbreak.
The survey was commissioned by YouGov Plc. The sample size was 2,552 adults, including 1,230 adults with personal credit card debt. The fieldwork was carried out from April 15 to April 17.