The data: Banks are still extending credit to more consumers, but they’re offering smaller credit limits as a maelstrom of economic uncertainty buffets consumers, per TransUnion data.

• Banks originated 18.5 million bank cards in Q1 2025—up from 4.5% from a year ago. (Originations are reported on a one-quarter lag.)
• The average new account line for the same quarter, however, fell 4.5% to $5,923.

Why the divergence: Banks are taking cues from their consumers. By some metrics, consumers are getting a better handle on their finances—but that’s in part because they’re worried about where the economy is headed.

• Consumers are still spending, but far less than before. Total credit card balances rose 3.8% YoY in Q2 2025, per TransUnion—down from 9% in 2024.
• Instead, they’re trying to get back in creditors’ good graces. The share of balances 90+ days past due fell in Q2 to 2.17%.

Cardholders are contending with new burdens like resumed student debt payments, which are eating on average $536 a month that previously went to discretionary spending and saving. They’re also facing the most precarious job market since the early pandemic and fears of an inflation reignition.

Concern is particularly acute among younger consumers, who are fast becoming the biggest market for credit card acquisitions. “The economy” topped the charts as the leading concern among Gen Z, per a June Edison Research and SiriusXM survey.

Our take: Banks have spent the last three years clamping down on access to credit, and now they’re pulling back on the most important factor for landing top-of-wallet status among Gen Z—credit limits.

With demand for credit cards contracting by the most since the pandemic started, banks need to consider whether they’re about to miss the window of opportunity to acquire financially healthy consumers who are still willing to spend with plastic before the economy slides into the much-feared stagflation malaise.