NEW YORK ( TheStreet) -- Bank risk officers expect difficulties in the credit card market to continue in the short term, according to a quarterly FICO survey released Tuesday.
Nearly 85% of the bankers who manage credit cards expect delinquencies on credit cards to increase or remain the same, while about 15% see the delinquencies dropping.
In addition, bankers predict that the reduced lending trends will continue through the year. Forty-six percent of respondents expect approval criteria for credit to tighten, while only 14% of those surveyed expect the criteria to be loosened.
Demand remains strong for new credit cards, but cards are harder to get. According to the survey, the number of new credit card accounts dropped by 17.7% during the 12 months ending in April, compared with the previous 12 months. But the number of inquiries for new credit fell by just 3%. This indicates consumers could not get all the credit they wanted. During that time, the total amount of credit available on all U.S. consumer credit cards fell by 12.2%.
These numbers show the industry is still weak and many cardholders are still in financial trouble, but FICO says the figures are an improvement over last quarter. The percentage of all respondents expecting an increase in credit card delinquencies fell, for instance -- to 42% from 59%.
Banks slashed credit card approval rates during the economic downturn to minimize their losses, especially to applicants with average or low credit scores. Continued high unemployment and bankruptcies do not create an environment that encourages these loans.
The FICO Survey of Consumer Credit Trends is a quarterly survey of bank risk professionals. It was conducted in July with 235 U.S. risk professionals.
-- Reported by Bill Hardekopf of LowCards.com.