Banks and credit card issuers are fast becoming stingy in issuing new credit cards to consumers, according to the latest data. Even people considered as responsible cardholders are seeing lower credit limits because of the credit crunch.

A recent research revealed that banks and card issuers approved 9.8 million new credit cards during the first four months of this year. Despite the staggering figure, the number represents a whopping 38 percent drop compared to the same period last year.

Even cardholders considered as low-risk borrowers are feeling the pinch with the average credit limit on a new card falling by 3 percent to $4,594.

Some industry experts have expressed dismay over the bank and companies' actions. It was hoped that banks and other financial institutions would help jumpstart the economy by pumping liquidity into the markets. Analysts say that the credit market needs to be fixed.

Many experts say that the recent developments have not come as a surprise. The sharp decline, however, has troubled many analysts who warn that the figure can have severe implications on the government's efforts to encourage more lending by banks and card companies.

The recent development is contrary to issuers' actions in the past. Financial institutions have traditionally raised credit limits during both poor and bullish economies.

Earlier this year, the federal government valiantly tried to stimulate lending by injecting billions of aid into banks. The government also bankrolled securities supported by assets like mortgages and credit cards to help improve the overall situation of the credit industry.

Experts also explain that credit card companies are being cautious in issuing new cards because of record chargeoffs and delinquencies. Many analysts see the poor performance of many cardholders as the result of the high unemployment rate that currently stands at 9.5 percent. There are fears that the number of unemployed Americans can balloon to more than 10 percent by the end of the year.

Delinquencies also posted relatively high figures in recent months. There were fewer delinquencies in April with cardholders paying off their debts using money from tax refunds. Despite this, credit card delinquencies still stand at 4.75 percent, according to recent data.

The credit industry is also reeling from an estimated $70 billion in losses as credit card losses amount to 10 percent. This figure is expected to rise as more companies are refusing to hire more employees, further adding to the nation's unemployment problem.