Credit card companies and banks are becoming more adverse than ever to lending money. Over the next eighteen months, issuers of Credit cards are expected to reduce available credit by over two trillion dollars. The reasons are obvious. After years of mailing credit card applications to any person with a pulse, their actions have started coming back to haunt them. Similar to the way thousands of home owners have defaulted on their mortgages, the stage is set for millions of card holders to begin defaulting on their credit card debts.
Already, Capital One, a major credit card issuer has reported that so many of their card holders are unable to pay their credit card bills that not too long ago they were forced to charge off over a billion dollars from their books. American Express, as well, has been forced to write off significant bad debts.
This upcoming Thursday, the credit card business is likely to get even more bad news – this time from the government. Barring unforeseen circumstance, the Federal Reserve is expected to vote on credit card reforms that will bring relief to many credit card holders faced with late fees. While great news for consumers, it deprives credit card companies of one of their main sources of income – exorbitant late fees.
The Federal Reserve is also expected to vote to prevent credit card companies from arbitrarily increasing rates on the balances owed by their credit card holders. In response, however, the credit card companies will probably end up reducing the borrowing limits on cards that they issue.
With the credit card companies current trouble, if you are a credit card holder and behind in your payments, now is probably the best time to negotiate a credit card settlement with your credit card company.
