With more banks and credit card companies feeling the effects of the global economic crisis and the recession in the U.S., consumers with poor credit history are bearing the brunt.
According to industry specialists and recent surveys, the number of new credit cards issued has dropped significantly by six million this year compared to the same period last year. Banks have also sent fewer credit solicitations to American mailboxes. In fact, card issuers this year have only sent a third of the six billion mails in 2005.
Card companies are also becoming stricter in issuing cards, taking additional steps to investigate the financial backgrounds of new applicants. With banks becoming stingy in issuing new cards, some lawmakers are afraid that the country might not get out of recession as quickly as expected. They have since called on credit card companies to scale back the new measures and extend credit to more consumers.
For consumers to avoid being rejected by banks and card issuers, industry experts are collectively suggesting measures that cardholders and consumers can adopt.
For starters, specialists say that traffic tickets and fines should never be charged to credit cards, at any cost. The presence of a ticket or fine would suggest to companies that a consumer is reckless or irresponsible. This would then result to higher rates, lower credit limits, or both.
Even people who have used their cards at 99-cent stores and small retailers face losing their credit card privileges, say specialists. They explain that some companies and banks often view this as an act of desperation or the inability of a consumer to pay. A sudden switch to a more affordable chain can also tell issuers that a cardholder is having financial problems.
Charging payments for marriage therapy and counseling can arouse the suspicion of some banks. For them, relationship problems can mean divorce which can mean financial troubles and the inability to pay monthly dues.
Card companies and banks also don't take lightly to lottery tickets and gambling trips to Las Vegas. Gambling is not considered a good financial plan and card issuers can consider it as an act of an irresponsible consumer.
Buying pornography using a credit card is not illegal. However, card companies will look at this in another way. For them, indulging in adult material can pass off as escapism from problems, maybe problems involving finances. Issuers dislike the thought of escaping financial responsibilities, experts contend.