Last updated on April 14th, 2023
Most of the economic coverage during the COID-19 pandemic has been somber – and it’s easy to see why. The Dow Jones Industrial Average is down more than 23% for the quarter, it’s worst showing since 1987. Seemingly everywhere, there are stories of financial doom and gloom. The fact is, however, that some companies have a bullish outlook during the coronavirus pandemic. That’s certainly the case for companies like Capital One, Synchrony, Discover, and Community. Here’s why credit card companies are rallying – and why it might be smart to get a credit card during COVID-19.
Credit Card Stocks Defy the Odds
Despite the dramatic fall in global markets, some credit card issuers are seeing their stocks rise. Synchrony shares, for example, rose almost 14% by the close of trading last week. Discover followed suit, with shares rising 11.4% for the same period. Capital One also increased – by over 10% – while the other industries saw the slide continue.
So why are these banks doing so well? A lot of it has to do with their credit card products. Synchrony, for example, issues many retail credit cards. Retail cards offer discounts for shopping at stores. Given the necessity of online purchases, these cards make for the ideal credit card in times of lockdown. The bank also issues the Rakuten Cash Back Visa, which offers extra savings on top of the cash back savings users get through the Rakuten app.
Using Credit During Coronavirus Uncertainty
Another reason why issuers like Synchrony, Capital One, and Discover are doing so well is that they offer a variety of credit cards for people with fair credit scores. By no means are all credit card offers from these issuers for lower credit scores. On average, however, they issue more credit cards to those with credit scores in the 600s than many other issuers.
This points to a growing trend of people increasing credit limits to help deal with the COVID-19 pandemic financially. While the outlook for the coronavirus pandemic is short term, the economic uncertainty has already hit millions of Americans. Additional credit lines for those struggling financially makes perfect sense.
Refinancing Credit Card Debt
Credit cards that offer 0% intro APR help those with existing debts refinance without the worry of repaying their balance for an extended period. Using cards like the Discover It® Balance Transfer, for example, frees up finances for up to 18 months – letting cardholders breathe easy during COVID-19.
While Discover is a reliable option, other lenders are also making a strong case for being the go-to refinancing options during economic recessions. The Upgrade Cash Rewards Visa from Sutton Bank, for instance, offers a unique approach to refinancing debts. The card provides a credit line of up to $20,000 plus an installment repayment plan of up to 60 months. Cardholders simply transfer funds from their Upgrade account to existing accounts, pay off that balance, and consolidate their debts into one payment.
The Upgrade Card offers interest rates starting at just 6.99%, making it considerably more cost-effective than other balance transfer credit cards. In fact, independent studies have shown that just making minimum payments with the Upgrade Card can reduce the time needed for repayment of a debt by over 20 years.
The Future Outlook for the Credit Card Industry
Given that many experts predict a rapid bounce back from the coronavirus recession, the economic outlook for banks and credit card issuers looks promising. While rewards programs might slump in the short term, the CARES Act bailout, plus a desire for the return to normalcy, will likely spur Americans to spend heavily come the late summer and fall.
For those most affected by the COVID-19 pandemic, however, credit cards for bad credit will likely see a spike in applications. Cards like the Indigo Mastercard, Milestone Mastercard, and even the Platinum Card from Capital One are robust tools for quickly rebuilding bad credit. Card applications for cards like these will likely surge, further spurring on the credit card sector.
Related Article: Is It a Good Time to Apply for a Travel Credit Card?
