American banks start being picky on credit card users

The crisis developing in the American banking industry causing unlimited number of consolidated debt cases and bankruptcy due to customers' inability to pay back the received credits brought banks tremendous losses and dropped their stock values. The completely messy situation forced American banks to change the approach and to become more careful in offering the credit cards to new users, as well as to overlook the existing credit cardholders to make the rules even tougher.

The biggest card issuer - Citigroup Inc. (losses $9.83 reported Q4), requires now higher credit scores before approving the new credit card holder. Bank of America Corp. (losses $2.76 billion in Q4) ), lowed down the basic credit lines, Capital One Financial Corp. (setting $1.9 billion on bad loans, US credit loans and auto loans and deterioration in $700 million), reduced the frequency of credit -line increases going as far as to low down the credit lines of its existing customers in first signs of its incredibility - tentative to apply for a new credit or troubles in paying back the balance. The majority of card issuers increased their late fees and other charges applied to help eliminate potential risks. However, the changes in the credit card policy shows that the banks are trying to put on the shoulders of their customers the losses occurred due to their own mislead of credit card holders who signed up fro the credits, originally non-affordable due to low income or instable income, plus the applied high interest rates made it almost impossible to pay the credit back in the set period of time.

It is expected the toughening of the credit card policy rules would bring the cut of general spending as most of the credit card customers are often rely on their credit cards to cover their daily expenses. Don't forget the fact that in the USA the absence of, at least two-three credit cards with minimum $5,000 debt in total would keep your credit score low that, in return, would bring the higher mortgage rate and higher rates on leasing the cars. So it seems to us that the Banks are trying to ruin the pyramid of debt built up a long time ago by the banks themselves ...

Natalia, reporter of Ecommerce Journal