FICO survey shows that the credit cards terms and conditions will only get stricter

A recent survey conducted by the risk officers at financial organizations across the United States clearly shows that Americans need to be prepared for higher rates of interest and lower credit limits in the days to come as the credit card terms and conditions get tighter.

The survey that was conducted for over 120 risk managers working in a number of firms across the United States was sponsored by FICO. The survey was conducted to know their thoughts on the consumer credit card limit in the foreseeable future and the results they obtained were startling. While close to 83% of the respondents said that the credit limit that will be offered on new cards will be in the range of low to average, over 95% of them felt that the rate of interest will either trend northward or remain in the current range.

There were many other shocking revelation that came up during the course of the survey. Though a few banks were celebrating their high second quarter profits and were happy about the fall in the delinquency rates, the risk managers felt otherwise. Over 59% of the total people who took up the survey by FICO felt that the delinquency rate will increase in the near future.

There was survey data that was collected for the CARD Act as well that is being highly talked of at the moment. Nearly 85% of the respondents felt that the CARD act which has been implemented by the federal government will in fact have a negative impact on the consumers. This Act was designed the safeguard the customers against the various malpractices being followed by credit card companies. However, with the implementation of the Act the situation might get worse is what the risk managers feel. The credit companies, after the enforcement of the CARD Act, are all ready to increase the rate of interest on the credit cards and bring down the lending limit on new cards.

Professional Risk Managers International Association and the Zell Center for Risk Research at Northwestern University's Kellogg School of Management jointly conducted this FICO sponsored survey. Close to 50% of the people who responded to the survey worked in either international or national banks and not part of the regional and local banks. Over 25% of the companies to which the respondents belonged have assets over $40 billion.

Doug Nicholas

Doug Nicholas, a financial consultant by profession with a Masters degree in International Business from Brown University, is also an ardent writer. Though he has a full time job at one of the companies listed on Wall Street, he does manage to squeeze in time to follow his passion. He puts his ideas to words in his articles related to finance and business.