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By Imani Moise
Dec 10 (Reuters) - After economic uncertainty due to the coronavirus pandemic sent credit card originations to a 10-year low, one major credit reporting bureau is predicting that demand will bounce back.
New originations for credit cards and personal loans are expected to return to pre-COVID levels in the second quarter of 2021, according to TransUnion's 2021 consumer forecast released Thursday.
Card originations slid 38% to 8.6 million in the second quarter this year, but that trend has already started to reverse as positive vaccine news and the steady reopening of local economies across the country boosted optimism among lenders.
"Lenders are back in the market where they had really looked to reduce their activity back to the end of the first quarter right around March going into April," Paul Siegfried, TransUnion's credit card business leader, said in an interview.
But so far consumers who have been saving more and spending less throughout the pandemic are still awash with cash, keeping demand low. The firm's researchers did not include the potential for additional stimulus in their analysis. More stimulus payments from the government would likely increase willingness to lend but reduce consumers' need for new lines of credit.
For the first quarter in the new year, the bureau expects the industry to slow those declines to roughly 19%, and then jump 65% in the second quarter to 14 million, bringing 2021 more in line with 2019, which was a year of near record-highs for the industry.
"2019 was really a high watermark," Siegfried said. (Reporting by Imani Moise; Editing by Steve Orlofsky)