Credit Card Outlook - June 29, 2009
Since the beginning of his term, President Obama has passed legislation to place more restrictions on credit card issuers--The Credit Card Bill of Rights and the CARD Act (Credit Card Accountability Responsibility and Disclosure). The new restrictions will take effect in 2010. Because of this, we are beginning to see signs of change already. Let’s take a look at how these changes will affect us as consumers.
We will start to see an increase in the minimum credit score requirements making it more difficult for people with lower credit scores to get approved for a credit card. Credit card issuers will begin to limit their risk to cope with the new restrictions.
Consumers will be forced to accept higher interest rate credit cards. Because credit card issuers are faced with a record number of delinquent and charged-off accounts, they need to increase interest rates across the board. Even people with excellent credit will be affected by these changes.
Smaller credit card companies will begin to gain popularity. Rather than opening an account with CITI, Capital One, Discover, or American Express, consumers will start opening credit cards through their local banks and credit unions. The smaller regional banks and credit unions stand to benefit from these changes because they can afford to take on more risk and offer credit cards to new borrowers.
Secured and small business credit cards will also become more common. Credit card issuers can limit their risk by offering these types of accounts and consumers will still benefit. These types of accounts will be most common among those with lower credit scores and can be used as a tool to help build new, positive credit.
Premier Financial Solutions has helped many individuals restore their credit by simply educating and working with them to build a plan towards credit improvement. Contact me to find out more about how I can help.
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Kevin D. Weier
Premier Financial Solutions, Inc.
Three Point Place
Madison, WI 53719
cell: 608.774.2434
phone: 608.268.6677
fax: 866.311.7478
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