Credit Card Issuance and Loans May Elude Consumers Soon
The economic meltdown seems to be in full swing, despite the financial bailout plan designed to help struggling lenders, corporations and banks around the US. The most noticeable damage for consumers is likely to come in the inability to attain new loans. Why is this? What is causing interest rates to climb? Why has your credit rating suddenly gone bottom up?
Credit card companies and loan lenders are likely the culprits behind your personal financial decline. According to recent news and press announcements, credit card companies and lenders in the US are restructuring how they do business. This means that consumers will feel an immediate pinch where it hurts most – in the checkbook.
Credit card loans were charged off in record numbers for 2008, just as the housing market meltdown was in full swing. In 2009, those numbers are expected to double. As a result of this, credit card companies are doing anything they can to remain afloat. This includes many things that can mystify consumers used to purchasing with credit.
First, credit card companies are increasing interest rates on loans. This means that your payments increase, through no fault of your own. In addition, many credit card companies, including giants of the industry like American Express, are reducing your credit limit. A reduced credit limit means that your credit score is harmed, dropping like a rock, once again through no fault of your own.
How do credit card companies decide whose credit limit is reduced? According to some sources, the decision is based on seemingly arbitrary items like the very stores in which you shop. This can have an immediate, detrimental effect on your finances, as well as the retailers in question. While no one knows which stores are being targeted as "high risk," there is no question that the practice is in full swing, making consumers pay more simply for shopping at a preferred store.
In addition, the restrictions for loans of all types are rising, as well. Lenders and credit companies are seeking any way to reduce the risks taken when they extend credit and this includes not extending credit to those who, until recently, would have qualified for any type of loan. What does this mean for consumers? It certainly means a dramatic shift away from the credit-based economy that has underlined the economy for decades. It may also mean a bleak financial future for many retailers and certainly holds uncertainty for a wide range of credit companies.
Credit card companies and loan lenders are likely the culprits behind your personal financial decline. According to recent news and press announcements, credit card companies and lenders in the US are restructuring how they do business. This means that consumers will feel an immediate pinch where it hurts most – in the checkbook.
Credit card loans were charged off in record numbers for 2008, just as the housing market meltdown was in full swing. In 2009, those numbers are expected to double. As a result of this, credit card companies are doing anything they can to remain afloat. This includes many things that can mystify consumers used to purchasing with credit.
First, credit card companies are increasing interest rates on loans. This means that your payments increase, through no fault of your own. In addition, many credit card companies, including giants of the industry like American Express, are reducing your credit limit. A reduced credit limit means that your credit score is harmed, dropping like a rock, once again through no fault of your own.
How do credit card companies decide whose credit limit is reduced? According to some sources, the decision is based on seemingly arbitrary items like the very stores in which you shop. This can have an immediate, detrimental effect on your finances, as well as the retailers in question. While no one knows which stores are being targeted as "high risk," there is no question that the practice is in full swing, making consumers pay more simply for shopping at a preferred store.
In addition, the restrictions for loans of all types are rising, as well. Lenders and credit companies are seeking any way to reduce the risks taken when they extend credit and this includes not extending credit to those who, until recently, would have qualified for any type of loan. What does this mean for consumers? It certainly means a dramatic shift away from the credit-based economy that has underlined the economy for decades. It may also mean a bleak financial future for many retailers and certainly holds uncertainty for a wide range of credit companies.
posted by Charls King @ 8:19 PM
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