Men tend to have higher total credit limits than women borrowers, study finds

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It’s no secret that there is a gender pay gap in the United States

Women earned only 84% of what men earned in 2020, according to the Pew Research Center. Therefore, it would take 42 additional days for women workers to earn the same income as men in that year.

Now the research of Federal Reserve Bank of Philadelphia highlights another potential gender gap in total credit card borrowing limits.

An “unexplained gender difference in bank card limits” of around $ 1,323 exists, with male borrowers having higher limits, research shows. This was after controlling for credit score, income, and demographics.

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The research, which is based on data spanning 10 years, found that the gender gap fluctuates over time.

The gender difference also varied depending on the size of consumers’ credit limits. For the smaller limits, women tended to have the upper hand when it comes to borrowing power. For higher limits, say $ 30,000 or $ 40,000, men tended to have access to more credit.

Women were also inclined to own more credit cards, but have lower average balances, according to the study.

The research is based on data from unique mortgage applications, which have no co-applicants and therefore could be precisely separated by gender. Therefore, the results may not be representative of all people with a credit card, said Nathan Blascak, a researcher at the Consumer Finance Institute at the Federal Reserve Bank of Philadelphia.

Blascak co-authored the research with Anna Tranfaglia, community development research analyst at the Federal Reserve Bank of Philadelphia.

“We didn’t know what the size would be,” Blascak said of the difference in credit limits between the sexes. “It ended up being relatively small, especially when you think about the gender pay gap.”

The reason for the difference is probably not based on prejudices of financial institutions, he added, as credit offers are usually generated automatically.

The gender pay gap certainly plays a role in the gaps, although to what extent is still unclear, Blascak said.

It’s possible that the gap starts when men and women create their first credit card, which sets initial limits, and then builds up over time.

The study also found that there are generally slight differences in the types of credit card offers men and women receive. Women tend to receive slightly fewer offers than men, as well as different types of solicitations.

While there are surveys of gender experiences with credit cards and limits, this is one of the first research papers to apply big administrative data in an attempt to answer the question of which men’s and women’s experiences differ, Blascak said.

“The hope is that this opens the door for other researchers to step in and start thinking about some of these questions,” he said.

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