Credit Card Users Beware!
Traditionally, the ideal customer for banks and credit card companies was someone who borrowed a lot of money at high rates and often paid back the least amount possible each month. Times have changed.
In the new challenging economic environment, lenders have recalibrated formulas, slashed credit lines, increased interest rates and closed accounts – sometimes even of customers with good credit scores. Ironically, at a time when more consumers than at any point in recent history need a little more flexibility, lenders are racing in the other direction.
This shift in policy affects everyone who is a regular user of plastic, because the lenders are targeting consumers at both ends of the spectrum. Individuals with high debt levels constitute greater default threats in a bad economy, so companies are restricting access to more money and tightening repayment terms. High credit score customers who pay on time and have low balances aren’t profitable enough for the lenders, so their lines get cut or their accounts get closed. The impact can be felt by a wide range of consumers because a reduction in available credit from companies has a negative impact on credit scores, which in turn adversely affects the cost and ability to borrow money.
Now more than ever, it’s important to pay bills on time, limit credit card debt as much as possible and keep a close eye on credit scores.