The credit crisis has over a period of time affected not only the existing consumers who use credit but also people who were shopping for fresh lines of credit. Earlier on during the credit crisis things ticking difficult for people who were looking to acquire credit either for the first time or additionally. But very soon the trickle effect caused things to get difficult for the existing credit card users as well. Here are some common scenarios that have resulted or credit cardholders owing to the meltdown in the economy.
Increase in the Interest Rate
Millions of credit card holders have experienced an increase in the credit card interest rate for as much as double or triple the original rate. This has resulted in the cost of carrying a balance on the credit card increasing astronomically. The increase in the credit card interest rate does not necessarily have to do with a bad payment history or a low credit score. Almost all lenders have typically become less tolerant to any discrepancy in the transactions. It is possible that a single late payment can trigger of an increase in the interest rate. When faced with an increase in the interest rate you have a few options has to how to deal with it. Closing down a credit card as soon as the interest rate increases may not be a good option in all cases. Closing down a credit card may hurt your credit score. Therefore it may be a good idea to pay off the balance at the higher interest rate if the other option is hurting your credit score which could do more long-term damage to your credit situation. You need to figure out how to respond to the interest rate increase and whether or not you should opt out of the increase which will probably result in the creditor closing down your credit card.
Credit Limit Cuts
Another percussion of the credit crisis has been that credit limit on the credit cards have been slashed by thousands of dollars for many consumers. Once again, this does not necessarily have anything to do with your payment history order your credit rating. It is possible for your bank to reduce your credit limit even though you have had a positive payment history with them. The credit limit on credit cards has been by up to 75% which means that the debt utilization ratio becomes high. You may not always received a notice before your credit limit decreases so it’s always a good idea to check your credit limit before making a purchase.
Difficulty in Getting New Credit
After major repercussions of the credit crisis is that banks and lenders are more stringent with whom they approve for credit. The lenders are unwilling to lend even to each other and even more so to consumer. People who do not have a crime credit score will find it more and more difficult to get approved for credit. The more serious the kind of credit such as an automobile loan or a mortgage loan, the more difficult it will be for the consumer to qualify.