In Case You Missed It - Credit Card Demand Is on the Rise

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ICYMI: Credit Card Demand Is On the Rise

In case you missed it, the appetite for credit cards is growing, according to the latest survey on consumer expectations from the New York Federal Reserve.

The application rate for credit cards was 27.1% last month, compared to 26.5% the year prior. As inflation continues to hit shoppers' wallets and recession fears continue to rise, more Americans may be turning to credit cards to fill the gap.

The New York Fed also released data that shows that credit card balances have seen their largest quarterly jump in two decades, rising 15% since last year.

But while demand for credit cards is on the rise, not all adults are interested in other consumer credit. Applications for mortgages, car loans, and mortgage refinancing have all declined since last year, while the rejection rate for applications ticked up during that same time.

While U.S. households are still relatively financially strong due to high levels of employment and increases in wages, growing reliance on credit cards raises concerns. If the United States were to tip into a recession next year (as many economists believe it will), unemployment would undoubtedly rise, making it harder for many households to repay the debt.

- Kristin

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Term of the Day

Credit Union

A credit union is a not-for-profit financial institution co-owned by its members. A credit union's members elect a volunteer board of directors to help manage the credit union. Profits are "returned" to credit union members in advantageous financial products and terms, while shareholders benefit from bank profits. Some credit unions return profits as annual dividends.

A member banking with a credit union might benefit from lower-than-average interest rates on loans or credit cards or higher-than-average interest rates on any money they save with the credit union.

Many credit unions were originally established by and for a specific group of individuals. For example, the Navy Federal Credit Union was originally for Navy service members. Today, the credit union welcomes all current and retired armed forces (including the National Guard and Space Force), their household and family members, Department of Defense civilian employees, contractors, and reservists, among others.

Off the Charts

Credit scores help lenders decide whether or not to approve loan applications and determine what loan terms to offer. And most credit scores are generated by two major companies: FICO, which stands for Fair Isaac Corporation, and VantageScore Solutions.

The FICO credit score looks at how much debt you have, how you've repaid in the past, and more. Scores range from 300 and 850, and are made up of the following components: