PHILADELPHIA—Seeking to account for higher credit risk, a new study suggests bank lenders have reduced credit supply (by 10%) to “opioid-impacted populations.”
The authors of the study from the Federal Reserve Bank of Philadelphia, “The Opioid Epidemic and Consumer Credit Supply: Evidence from Credit Cards,” said they found individuals in counties with high opioid usage had more days past due on their credit cards.
“When banks did solicit consumers with credit card offers in counties with heavy opioid usage, they charged a higher interest rate on the credit card debt (one to two percentage points higher), lowered the credit limit (a 12–21% decrease), and offered fewer rewards (a 4% decrease),” the Fed stated.
The Philadelphia Fed added that it further found that within high-opioid-usage counties, credit terms were worse for certain groups, including people with incomes under $30,000 per year, those under the age of 25, and minorities—particularly Black Americans.
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