Bureau review shows credit card limits declined during pandemic for high-credit-score borrowers as others ‘stagnated’

Credit card account limits declined overall during the pandemic – the largest declines being for high-credit-score borrowers – though a spike in account closures early in the pandemic began a decline after May 2020 that continued through at least May 2021, the consumer financial protection agency said Wednesday.

The information, provided in a blog post by Consumer Financial Protection Bureau (CFPB) staff, is part of a series and is the first report since last August. The data, taken from the bureeau’s Consumer Credit Panel, shows that across all accounts for consumers:

  • Credit limits for prime and near prime borrowers broke with their previous upward trend and largely flattened out beginning in March 2020; they began to grow more quickly beginning in February 2021.
  • There were substantial overall reductions in credit limits for super-prime borrowers after March 2020, a trend that has continued in recent months. The average super-prime borrower in May 2021 had about $640 less credit card credit available than they had at the beginning of 2019 and $1,320 less than the peak in March of 2020.
  • Credit card limits for subprime and deep subprime borrowers seem to changed little during the pandemic.

Bureau staff also noted that for existing accounts only from January 2019 through February 2020, there was a steady rise in average credit limits for all score groups, but credit limits on existing cards largely flattened out for all credit score groups beginning in March 2020. “Super-prime borrowers are the only score group with substantial reductions in credit limits as the average amount of credit available to these consumers fell by about $500 by May 2021 compared to March 2020,” they wrote.

Staff noted, however, that a spike in account closures early in the pandemic, and reported last August, “appears to have been short-lived.” They said that after the spike in May 2020, the total number of account closures declined through July and returned to pre-COVID-19 levels through at least May of 2021.

Credit card limits are rising for most groups after stagnating during the pandemic