Strict approval guidlines and less offers available to consumers…
No one could foresee the drastic changes taking place in the credit card industry in 2008. The year started off strong with dozens of offers from a wide variety of issuers. Easy credit was alive and strong! But eventually the mortgage crisis, which started in 2007, spread and created mass chaos throughout the financial industry leading to one of the worst recessions in decades. With unemployment rising, higher default rates have created even more problems for credit card issuers. Approval guidelines are tighter, numerous offers have been sidelined and several major issuers have stopped marketing their credit cards entirely.
Only the Most Qualified Applicants
For consumers with excellent credit, little will change in the coming year. Interest rates are extremely low and some great deals still exist for responsible cardholders. But for those with average or borderline credit - expect a long and bumpy road. “Credit card issuers are looking for the most qualified applicants with the highest credit scores,” said Jeremy Panizzoli, President and Founder of ASAPCreditCard.com. “Even with interest rates at all time lows, if you don’t have an excellent credit score - don’t expect an excellent interest rate. Consumers need to be much more cautious when choosing a credit card in 2009.”
Less Offers Available to Consumers
To make matters worse, credit card issuers have dramatically reduced the number of credit cards available to consumers. Citi and American Express have stopped marketing a variety of their most popular credit card offers. And Bank of America, Chase, First National Bank of Omaha, HSBC and Orchard Bank have quit marketing their offers entirely. This leaves very few options for consumers searching for a new credit card in the coming year.
What to Expect for 2009
It’s uncertain what to expect for the remainder of 2009. Federal regulations were enacted in December, which will make it even more difficult for credit card issuers in 2010. Although the regulations were a big win for consumers, they could lead to additional problems moving forward and the credit card industry could be changed forever.
Even so, Panizzoli believes things will start to improve in the coming months. ”Right now, the credit markets are locked up because of the subprime mortgage mess. With billions of dollars in government stimulus, it’s only a matter of time before banks start lending money again. Although unemployment is still a concern, as more money becomes available it will trickle back into the credit card market where lending criteria will slowly loosen up and credit card offers will return. Although easy credit might be a thing of the past, credit card companies make too much money to quit marketing and approving credit cards.”
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