Major U.S. financial institutions are actively recalibrating their consumer lending strategies, a shift evidenced by a notable contraction in new credit card approvals. This strategic pivot, unfolding during President Donald Trump’s first full year back in the White House, sees Wall Street’s largest banks increasingly prioritizing affluent, high-spending clientele while simultaneously tightening access for lower-income applicants. The move signifies a significant development in consumer credit, reflecting a cautious stance adopted amidst prevailing economic conditions.
- U.S. financial institutions are contracting new credit card approvals.
- The strategy shifts to prioritize affluent, high-spending clientele.
- New credit card accounts declined by 5% in Q2, the first contraction in over a year.
- Leading issuers are enhancing luxury card offerings and intensely prescreening marketing efforts.
- Lower-income cardholders are experiencing rising balances and high average interest rates (24.35%).
- Banks maintain a cautious outlook, citing “significant risks” despite economic resilience.
A Strategic Pivot Towards Affluence
Recent earnings reports from leading card issuers, including JPMorgan Chase, Citigroup, Capital One, and American Express, reveal a distinct trend: a 5% decline in total new credit card accounts during the second quarter. This marks the first such contraction observed in over a year. Executives attribute this reduction to more stringent approval requirements, specifically targeting applicants perceived as higher risk due to lower credit scores or limited financial flexibility. This refined approach indicates a deliberate effort by banks to curate a cardholder base aligned with specific profitability metrics, favoring premium market segments over broad-based expansion.
The pronounced emphasis on the premium segment is further underscored by the introduction and enhancement of luxury card offerings. Capital One, for instance, has observed that its “highest, fastest-growing part” of the card business stems from “heavier spenders,” as noted by CEO Richard Fairbank. The company’s investment in exclusive amenities, such as a luxury airport lounge at JFK available solely to holders of its high-annual-fee Venture X card, exemplifies this focus. Similarly, JPMorgan and Citigroup have rolled out upgraded high-end cards, and American Express plans further enhancements to its esteemed Platinum card. This strategic alignment towards affluence is directly mirrored in approval standards; the Federal Reserve’s Senior Loan Officer Survey indicates that more banks increased credit card approval standards than eased them in 2025.
Data Reflects Targeted Marketing and Profitability
Empirical data reinforces this targeted approach. American Express reported a 6% decrease in new account openings year-over-year, yet its average annual fee per card rose from $101 to $117. This increase suggests an elevated adoption rate of its premium products by a more affluent client base. Marketing efforts have become equally selective; in April, over 87% of card-related mail was prescreened, representing the highest share since 2022. This means offers were extended exclusively to consumers who already met stringent credit criteria. Megan Cipperly, Vice President at Competiscan, a marketing analysis firm, highlighted this narrowing of focus, stating, “Only a small subset of consumers are receiving the lion’s share of credit-card offers, and they’re not necessarily the ones who need more credit.” She further noted that consumers with excellent credit scores, while representing less than 25% of the overall credit card market, are receiving the most attention from issuers.
This distinct preference for high-score cardholders is rooted in clear financial advantages for banks. Such customers typically exhibit higher transaction volumes, make timely payments, and maintain significantly lower default rates. These habits generate substantial interchange fees for issuers and simultaneously minimize credit risk. American Express’s internal data further illustrates this phenomenon: while overall airline spending remained flat, spending on first-class tickets surged by 10%, and short-term rentals exceeding $5,000 increased by 9%. This demonstrates a robust spending appetite within the premium customer base, directly contributing to bank revenues and strengthening their balance sheets.
Widening Disparity in Credit Access
Conversely, the broader consumer market, particularly lower-income cardholders, is exhibiting palpable signs of financial strain. Card balances are on a steady upward trajectory, signaling that many households are increasingly relying on credit to manage their finances. Concurrently, the cost of borrowing has escalated significantly; data from LendingTree indicates the average interest rate on credit cards reached 24.35% this month. Despite these pressures, delinquency rates have remained steady thus far, but banks remain highly cautious. JPMorgan CEO Jamie Dimon acknowledged the U.S. economy’s “resilient” performance in the recent quarter but underscored that “significant risks persist.” This sentiment underpins the conservative lending policies adopted by financial institutions under the current administration, effectively creating a widening disparity in access to credit. This strategy favors the affluent while restricting options for a substantial segment of the American population.
David Thompson earned his MBA from the Wharton School and spent five years managing multi-million-dollar portfolios at a leading asset management firm. He now applies that hands-on investment expertise to his writing, offering practical strategies on portfolio diversification, risk management, and long-term wealth building.