Rising Credit Card Delinquencies May Aid Your Debt Settlement Efforts
Credit card companies are starting to feel the squeeze. Some of the country’s largest credit card issuers are suffering from large quarterly losses and are watching their credit card delinquency rates rise to historic levels.
According to a recent CNNMoney.com article,
“Credit-card companies will “pull back on growth and aggressively manage credit lines to manage through this cycle,” said Meghan Crowe, an analyst at Fitch Ratings. “Charge-offs will increase. Margins will be squeezed because of higher funding costs, higher provisions and as consumer spending slows down.” The credit ratings company expects an increase in charge-off rates among borrowers with strong credit to hit at least 7% by the end of the year from 6.4% in May.”
Essentially, credit card companies will need to restrict credit limits for some of their customers to help curb future loses. They expect more accounts to go delinquent and expect less revenue from a reduction in consumer spending.
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Loading ...Credit Limit Increases Should Be Weighed Carefully
I recently receive a notice from my credit card company that my credit limit had been increased because I’d been a “good customer.” I didn’t request the increase but it’s not uncommon for card issuers to increase limits for customers who pay their bills on time or have low balances. Generally, the better your credit, the more likely you’ll be offered an increase on a credit card.
However, for many people an increased credit limit is simply a temptation to spend more money. They may be better off declining the increased limit to avoid running up too much debt. It only takes a phone call to the credit card company to ask that the limit not be increased. Another reason to decline a limit increase is that other creditors may look at that increase as a sign that an individual has too many lines of credit open. If another creditor gets nervous that a customer won’t be able to make payments on their card, they may decide to lower the limit on that card.
Carefully weigh any limit increases offered and don’t be dazzled by big numbers. Each individual must look at their own situation to decide whether they can really handle having access to a large amount of credit.
About the Author
Francine L. Huff is a freelance journalist and the author of The 25-Day Money Makeover for Women. She has appeared on a variety of TV and radio shows.
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Chris Rocks is the Regional Director of the National Credit Federation (NCF). NCF is a nationwide membership-based organization that assists consumers recovering from a financial difficulty and those who need a significant increase in their credit score.
Chris began his financial services career as a Financial Advisor helping young families with risk management and asset accumulation strategies. It was during that time that Chris realized that many of these young families also needed someone to guide their choices with regards to debt management.
He made the transition into the mortgage industry where he first worked as a loan originator and later the Vice President of a small mortgage company. As Chris came across clients who had suffered through financial challenges and saw the difficulty they had in re-entering our credit driven economy, he discovered there was a real opportunity to leverage his unique background and help others.
He can be contacted by visiting his personal site, GoodCreditLiving.com.
Francine L. Huff is the Publisher and Editorial Director of Super Savvy Publishing, LLC, which provides editorial and publishing services. She is a gifted author, freelance journalist, and motivational speaker who has entertained and motivated a variety of audiences through workshops, panels and keynote addresses. Francine is the author of The 25-Day Money Makeover for Women, which has inspired and motivated many readers to reign in poor financial habits, become good stewards over their money and work toward a debt-free life. She has appeared on a variety of TV and radio shows. Francine previously worked for the Wall Street Journal, where she was the spot news bureau chief, a news editor and a copy editor. She has interviewed a variety of financial professionals about financial issues and strives to present information about managing money in an easy-to-understand format that is accessible to people of all backgrounds and income levels.
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