Why Credit Cards Are Getting Tougher and Tougher to Get
It is getting so difficult now to get approved for a credit card that many people are required to submit copies of their bank account statements to verify their net worth. That is a far cry from what it was just a few short years ago when anyone and their brother could have gotten just about as many credit cards as they wanted to.
I remember reading stories about young children and dogs being approved for credit cards. I think we can all remember the solicitations from banks and credit card issuers complete with applications stuffing our mailboxes on a daily basis. No more, those days are over… at least for the foreseeable future anyway.
This horrid recession that we’ve been going through for the past two years, and continue to struggle with, has forced banks and credit card companies to tighten their standards big time. Even for those select few that do get approved for a credit card application are finding that the credit limits they are getting are substantially less than what was being offered prior to this recession taking hold.
Now it’s nothing new that the credit card companies tighten their standards during economic slowdowns, but things are different now. The Credit Card Act that was passed in 2009 will greatly handicap card issuers ability to raise interest rates on their account holders and will therefore cut into their profit margins.
So what will it all mean to the consumer going forward? Pretty simple really… standards will be tightened considerably for credit card applicants, more of them will be rejected and the ones that get approved will see smaller credit limits.
In addition, interest rates will be higher and fees will increase. We may have also seen the end of fixed rate credit cards as well. The reason being that the credit card legislation for habits the raising of interest rates on fixed rate cards but there are no such limitations in place when it comes to variable rate credit cards.
That is the immediate future at least. Down the road as the economy continues to improve, who knows what will happen. I wouldn’t be a bit surprised if after a few years have passed and this recession becomes more of a distant memory that credit cards will once again be handed out like candy.
Related Information:
- Credit Card Approval is Getting Tougher and Tougher It's getting harder and harder to be approved for a credit card because of the record high number of defaults....