Banks Putting Squeeze On Credit Cardholders

Banks are under pressure and trying very hard to increase profit in the credit card dealings. Interest rates are increasing, credit lines are being cut and additional fees are being made compulsory on even the best cardholders.

The increase in rates and fees is a sign of depressing new realities of the industry – there are high amount of percentage of uncollectible balances as a new US law may further limit the cards’ profitability.

Banks have started increasing interest rates and shortening the payment duration and are implementing new methods before new rules come into action in February. Recently,  Fed provided evidences that showed that banks are increasing interest rates.

Due to this code of action taken by the banks, House of Representatives are trying to implement the new law as soon as possible.

Banks are now planning to tighten the requirements for eligibility by allowing only few people to purchase the credit card.

In the era of modern financing, credit cards were considered a profitable source of income contributing to tens of billions of dollars in annual profits with a default rate that hovered around 4 per cent until the recession.

However, only limited applicants will now be approved for new credit cards. These credit card holders will be required to pay increasingly high annual fees or interest rate rather than fixed rates.

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