Payment Card News

Credit Squeeze

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If want to switch to a new credit card, better do it soon! Banks are getting stingy. One-fifth of banks reported this month they had tightened standards on credit card loans over the past three months, compared with only 12% in January. In addition, 19% of the banks responding to a survey, say they have reduced credit limits on credit cards. The findings come from the May 2001 Senior Loan Officer Opinion Survey on Bank Lending Practices conducted by the Federal Reserve. The recent run-up, or expected future increases, in consumer delinquency rates were most often cited as a reason for changing consumer-lending policies. The FRB survey also found that 10% of domestic financial institutions reported increased demand over the past three months for consumer loans of all types, including credit cards. However, almost all domestic banks reported no change in standards for residential mortgage loans. Loan officers from fifty-five large domestic banks and twenty-one U.S. branches and agencies of foreign banks participated in the May survey. For more information visit www.federalreserve.gov.

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