Think the mortgage crisis doesn’t affect you if you don’t have current problems with your home loan? Think again.
This year, you can expect the fallout from the mortgage crisis to affect your Christmas shopping if you typically use credit cards to handle those expenses.
Although credit card companies are closing accounts left and right, cutting credit lines and raising interest rates, it may not be enough. Even though credit card debt is only a fraction of the mortgage problem, major card issuers like J.P. Morgan, Chase & Co., Citigroup and others cannot afford more losses. With the unemployment rate heading towards 8%, lenders are fearful that they will not be repaid when extending credit.
According to the US Federal Reserve reports, 60% of American banks have tightened up their credit card standards since July. Even those continual credit card offers sent in the mail are falling to the lowest point in over three years. The Wall Street Journal reports that many credit card holders will see an interest increase by an average of three percentage points and the increase will affect millions of customers.
Lenders are also being extremely careful in opening new accounts to avoid the subprime crisis from beginning all over again. Thanks to tightening standards, especially in areas like California and Florida who were hardest hit by the housing crisis, residents in these states may feel the biggest fallout.
No comments:
Post a Comment