Industry experts are trying to make sense of the potential effects of new bank credit policies that fast becoming a trend nationwide.
A new research revealed that banks and credit card companies issued far less credit cards in recent months compared to the same period one or two years ago. According to analysts, banks issued 6 million fewer cards through April of this year.
Banks also sent fewer offers to American mailboxes this year, compare with figures four years ago. Before the onset of the recession, credit card issuers and other financial institutions sent more than 6 billion card offers to consumers through the mail. This figure has been slashed dramatically with only a third of the figure expected this year. Experts also say that consumers are significantly spending lesser of their hard-earned money using credit cards.
Analysts also noticed a shift in consumer mentality. According to financial experts, more and more Americans are spending less and saving more. They point out that the recession and rising unemployment have force many consumers to cut back on spending and allot more of their budget for savings.
This was evidenced by data collected and analyzed since before the economy grew worse. In 2007, American consumers saved less one percent of their income. Just this May, though, this figure has risen to almost seven percent. The last time this happened was a decade and a half ago in December 1993.
Cardholders also suffered from increasing debts just before the recession. It was estimated that credit card debt - and losses - grew by the billions every month. Now, federal regulators are saying that this collective amount has fallen for eight straight months now.
Lawmakers are also divided whether to praise the banks' apparent stinginess or criticize them for not lending enough. Sen. Bernie Sanders and other legislators believe that banks and credit card firms are cutting back too soon and too fast. Without enough lenders, they say, the country could be in for a long haul.
Rep. Carolyn Maloney, of New York (D), however, believes that the developments are a step in the right direction. Maloney is one of the chief sponsors of President Obama's historic credit card law that will come into effect this February.
Maloney says that credit cards are best when used responsibly by consumers. In the same manner, she adds, credit cards should be offered responsibly by banks.
Many proponents have expressed support for the measures, saying that it is about time that the credit industry faces tougher regulation to protect consumers.