A recent survey conducted by the Federal Reserve revealed that a significant percentage of credit card companies and firms have slashed credit limits or ceilings, raised interest rates, and increased minimum credit scores needed to qualify for a credit card during the past 90 days.
Loan officers who were interviewed in this survey disclosed that 75% of credit card companies showed disinterest in complying with the Credit CARD Act not until its implementation in February 2010. This further implies that card issuers would use the time left before February 2010, to exploit their privileges in imposing and dictating card fees and charges.
A quarterly survey initiated by the Federal Reserve was conducted in October of this year and interviewed loan officers from 23 foreign banks with offices in the US, and 57 domestic banks.
Loan officers who were surveyed were asked of their opinion about the Credit CARD Act and its impact and implications to the credit card industry. The following are some of the results of the survey:
Annual percentage rate or annual fees - A good forty percent of card companies included in the study have plans to increase or have already increased annual fees of credit cardholders.
Approval policies - Almost 50% of loan officers interviewed stated that they have increased or are planning to increase the minimum credit score needed to qualify prime customers for card approval. On the other hand, 53% of card companies included in this study said that they have raised or are planning to raise the minimum credit score needed by subprime clients for card approval. Overall, it is now much harder to qualify for a credit card or to get a card approval than before.
Interest rate charges - Close to 75% of banks have raised or are planning to raise annual percentage rates for subprime clients or customers that have poor credit. On the other hand, 54% of banks included in this survey are planning to raise or have already raised annual percentage rates for prime customers or clients with good credit.
Credit ceiling or limit - Around 50% of banks interviewed have slashed or are planning to cut card ceilings or limits.
The statistics show that majority of card issuers have been making significant adjustment to credit card limits, rates, as well as fees. A lot of card holders lately have been getting notices of interest rate hikes and credit limit cuts. Credit card issuers are making full use of the time they have left to exercise their right to implement fees and charges.