The ups and downs in credit card borrowing lines

During the onset of the COVID-19 pandemic, many credit card holders improved their repayment histories and enjoyed a noticeable boost in credit scores. However, research by Juan M. Sánchez and Masataka Mori at the St. Louis Fed has underscored the temporary nature of the factors driving that improvement in creditworthiness.

Our FRED graph above uses large bank credit card data, reported by the Federal Reserve Bank of Philadelphia, to offer a complementary perspective on this topic:

• The solid blue line shows the percentage of credit card accounts that recorded an increase in their borrowing limits. Between 2013 and 2019, that percentage rose steadily, declined precipitously during 2020, and quickly bounced back to its pre-pandemic trend.
• The dashed green line shows the percentage of credit card accounts that recorded a decrease in their borrowing limits. The uptick in 2020 doesn't stand out all that much compared with the entire period between 2013 and 2024.

Thus, the short-lived boost to credit scores referenced earlier did not seem to translate into broad changes to borrowing limits.

Our interpretation of the data matches the findings from recent research by Joanna Stavins at the Boston Fed. She notes that, as of late 2024, "any erosion of lending standards that took place during the early stages of the pandemic has been reversed." In other words, the credit card industry has seemingly returned to its long-term, relatively stable practices.

How this graph was created: Search FRED for and select "Large Bank Consumer Credit Card Balances: Accounts with Credit Line Increase." From the "Edit Graph" panel, use the "Add Line" tab to search for and select "Large Bank Consumer Credit Card Balances: Accounts with Credit Line Decrease."

Suggested by Noelle Pak and Diego Mendez-Carbajo.