Nearly 50 million credit card customers in the U.S. said they have had their credit limit slashed or their card closed in the past month as lenders move to minimize their risk amid the COVID-19 shutdown, a new study revealed.
The survey, released on Monday (May 4) by CompareCards, a division of LendingTree, found one in four Americans say their credit card terms have been changed involuntarily since the start of the coronavirus pandemic.
“Given the enormous impact of the coronavirus outbreak on the American economy, and especially the unprecedented spike in unemployment that has occurred in recent weeks, it is no surprise to see banks reining in lending,” the study’s authors wrote. “Something similar happened a decade ago when lenders slashed credit limits and closed card accounts at the outset of the Great Recession.”
They found that among cardholders, 37 percent of Gen Z (ages 18 to 23), 36 percent of millennials (ages 24 to 39) and 35 percent of Gen X (ages 40 to 54), said they experienced the changes. That compares with just 8 percent of baby boomers, ages 55-74.
The survey said 37 percent of men were three times more likely than women to see their limits cut. In addition, 36 percent of those earning $100,000 or more had their limit slashed or card closed in the past 30 days, researchers found.
Perhaps the biggest surprise of all to the pollsters was 41 percent of Americans were unaware credit card issuers can cut their credit limit without notification.
In addition, they found three in 10 cardholders are using credit cards more than ever, while 42 percent are using their credit card the same as before and 27 percent are using their card less.