Banks Boost Credit Lines as Customers Drown in Debt
Capital One Financial Corp. has begun to lift borrowing limits for certain customers as it seeks to restart growth in its sprawling credit-card business.
Increases are being offered to existing customers with both prime and subprime credit scores, Chief Executive Officer Richard Fairbank said at a virtual investor conference Wednesday. The company continues to hand out smaller credit lines to new customers.
Capital One, the third-largest U.S. credit-card issuer, was among the first banks to cut borrowing limits last year as jobless claims mounted amid the Covid-19 crisis. In recent years, the firm has been investing in improving its technology that has long allowed it to offer cards to people with riskier credit profiles.
“This is something that happens one customer at a time,” Fairbank said. “As time has passed and we’ve validated certain things with our models and so on, we’re stepping out a little bit more on the credit lines.”
Even with customers allowed to spend more on their cards, Capital One is contending with the fact that consumers have sought to pay down debt throughout the pandemic. That’s hindered loan growth on the firm’s cards.