An article in the New York Times suggests that it could be quite a while before consumers find themselves bombarded by 0 percent balance transfer offers, low interest-rate deals and other enticing incentives.
Meanwhile, many lenders are drawing back and changing terms on cardholders.
Do you have iffy credit – or even pretty good credit? Be on the lookout for a possible increase in the amount of interest charged by your card provider.
Do you have a card that you keep on hand for emergencies but which has not been utilized for several months? Use it or lose it should be your mantra, as companies seek to cull dormant accounts in this new cautious environment.
The problem is that lenders are reeling from their large losses, suffered due to the large number of borrowers who are defaulting on their payments.
According to the Times, around $21 billion in bad credit card loans was written off in the first six months of this year alone. And further losses of as much as $55 billion in the next 18 months are not unthinkable.
With these figures in mind, financial institutions such as Bank of America, Chase and American Express are taking drastic measures to protect themselves, the Detroit Free Press reports.
Even if a household has very good credit, a bank may choose to shut down an unused account to prevent the family from racking up debt in the case of a financial emergency – such as job loss.
“They’re worried they’ve got too much exposure. It’s a risk analysis,” consumer advocate Gerri Detweiler told the news provider.
The bottom line is that in the current economy, cardholders should watch out for any changes to their card agreement that come their way.
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