Neediest Credit Card Users Are Seeing Their Limits Fall the Most
- Banks cut overall limits for subprime cardholders by 19%
- Moves come as unemployment soars during the Covid-19 pandemic
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Subprime borrowers, who rely more on credit cards than any other group, are seeing their limits cut the most as banks reduce exposure during the coronavirus pandemic.
The risk-management strategy shows a squeeze is coming for households with the most precarious finances as the U.S. government pares assistance for people who have lost their jobs amid the Covid-19 crisis. Not only are many losing income, they’re also losing access to credit.
Banks cut overall borrowing limits for subprime borrowers by about 19% during the second quarter, according to data provided to Bloomberg by credit-reporting firm TransUnion. That compares with an average reduction of just 1.2% across all card accounts during the same period.