Banks seem to be ramping up their marketing efforts for credit cards aimed at high-income consumers, while simultaneously tightening access for those with lower incomes.
According to a recent report, the number of new credit card accounts opened in the second quarter fell for the first time in over a year, marking a 5% decrease compared to the same period last year, as noted by the Wall Street Journal.
The focus on high-income individuals is apparent, with major banks like JPMorgan Chase and Citigroup launching premium card offerings. Capital One, for instance, recently unveiled a luxurious lounge at New York’s John F. Kennedy International Airport to further attract affluent customers.
Conversely, it’s becoming more challenging for low-income consumers to secure credit cards. The report indicates that the volume of credit card-related mail directed solely to consumers meeting specific credit standards reached its highest point in nearly three years this past April, with a noticeable trend of banks tightening eligibility criteria.
PYMNTS highlighted that subprime borrowers are now 3.6 times more likely to express interest in a new credit card compared to those with top-tier credit scores. This reflects a broader trend where, despite carrying debt, many consumers, including those in subprime categories, are reportedly managing their financial obligations. Yet, some are feeling the strain from persistent inflation and a challenging economic landscape.
During a revenue call on July 22, Capital One’s CEO Richard Fairbank remarked that while many U.S. consumers are “in a great place,” certain segments are feeling the pressure from cumulative inflation and rising interest rates. Although delinquency trends suggest some moderation in these effects, Fairbank noted that lingering impacts from the pandemic are still visible.
There are pathways for non-prime customers via starter cards, which can, in theory, lead to more favorable “graduation strategies” to access better products. Roland de Gracia, a senior commercial manager at Concora Credits, stated in a recent interview that when these consumers are targeted with appropriate products, they tend to accept them due to better benefits and reduced fees.
