Are Credit Card Issuers Finally Ready to Eliminate Predatory Practices?
Very soon the shower of credit card applications attacking your mail box or e-mail every day may become just reminiscences. Almost every experienced cardholder knows the cost of unsolicited credit offers. With the aim of capturing as many customers as possible, such card deals were sent to people indiscriminately.
In most cases your credit score and payment history did not matter and the fact that some customers may be unable to pay did not stop issuers. In the end lots of people came up with a gross debt and sometimes - with the need to file bankruptcy.
However, the credit crisis affected not so much credit consumers as card issuers themselves. Realizing that they may soon be incurring great losses, lenders are giving up some of their predatory practices.
So, what steps are banks taking to avoid possible losses and recover from those they have already endured? They are different but the principle changes are targeted at tightening up credit requirements for all customers, responsible and paying ones, as well as those who default.
One of the major US lenders, Bank of America, Corp., is intended to lower the initial credit lines both for good and bad credit consumers.
Other issuers, including Capital One Financial Corp., choose to play safe and for this reject or limit credit- line increases and lower credit lines for customers who are showing signs of credit distress. So, if a cardholder suddenly applies for too many credit cards or makes frequent cash advances or is late paying the bill, he/she may see a drop in credit line.
Are you going to become a customer of Citibank? Then it makes sense to work at improving your credit rating to meet the new requirements of the bank which demands a higher credit score to qualify for their offers.
Almost all credit card issuers are raising their default APRs and late payment fees together with some other charges to compensate for the risk of revenue losses because of not paying customers.
All these steps, though they may seem ruining for most cardholders, are in essence their rescue from a heap of unpaid credit card bills, sky-high interest rates, exorbitant late payment fees, huge balances and bankruptcy at last.
Lenders go back on tracks and refuse from the practice of keeping customers in life-long credit slavery, crippling them with interest rates impossible to pay.
Of course, there will be cardholders who will definitely suffer from the elimination of the so-called "easy credit". Those who have got accustomed to relying on the plastic as the basic source of funds may face denials in credit. They will have to start it all over with a secured card. However, they ill have time to learn more about the right way to use credit and improve their rating.
No doubt, being more selective about which card should be granted to a person will improve developments in the credit industry as well as in the finances of cardholders.
