The share of new credit cards going to borrowers in the lowest-income neighborhoods rose nearly 2 percentage points early in the pandemic, Federal Reserve Bank of New York researchers found.
Those accounts later showed greater payment distress, the authors said in “A Look at the Wider Divide in Credit Card Delinquency by Income,” published Nov. 10 in Liberty Street Economics. Their findings link easier access to cards during the pandemic with the subsequent widening of the delinquency gap between poorer and richer neighborhoods.
The researchers examined anonymized Equifax credit reports in the central bank’s Consumer Credit Panel, grouping borrowers by average ZIP code income and cards by issuance period. Their comparisons covered cards issued before 2017, in 2017–19, in 2020–22 and since early 2023, with an assessment of new borrowers’ credit scores through 2025.
Credit card delinquency rose sharply between 2022 and 2024, with the steepest increase among borrowers in lower-income neighborhoods, the authors found. Recent rates exceeded pre-pandemic levels across all four neighborhood income groups, while the gap between the highest and lowest groups widened.
The share of new credit limits going to borrowers in the lowest-income quarter of neighborhoods also rose nearly 2 percentage points early in the pandemic, the researchers found. Both that share and their share of new cards stayed elevated until 2023, which the authors said was consistent with lenders relaxing approval standards.
The median credit score when borrowers received cards fell to 688 in 2020–22 from an average of 699 in 2017–19, the authors found. The decline probably understated the easing in lending standards because credit scores across the population were rising.
The authors said payment deferrals and other loan relief helped raise scores by keeping some borrowers from being recorded as overdue. Economic conditions probably accounted for most of the fall and subsequent rise in delinquency, including the withdrawal of pandemic support and higher prices and borrowing costs.
Cards issued in 2020–22 contributed heavily to new serious delinquencies during 2023 and into 2024, the researchers found. They defined that measure as balances becoming at least 90 days overdue and said the group’s lower credit quality might explain its performance.
Delinquency rates on pandemic-issued cards are now declining, the authors said. If current patterns persist, the recent increase could fade as those accounts make up a smaller share of remaining cards.
The researchers said newer cards have historically been most likely to fall overdue, making recent borrowers’ credit quality the largest influence on near-term delinquency. Through 2025, scores at issuance were below 2024 levels but above pre-pandemic and pandemic levels, they found.
Absent economic shocks, the authors expected new card delinquencies to keep showing improvement. Their views do not necessarily represent those of the New York Fed or the Federal Reserve System.
