The country has seen lay-offs and furloughs and now banks are preparing for people making late payments and defaulting on their credit cards. LendingTree Chief Credit Analyst Matt Schultz says banks are canceling cards and decreasing credit limits. People who are suffering financially could lose their credit cards. The timing couldn't be worse. Schultz says, "It's a really difficult time to do that because a lot of people now are using those credit cards as a financial safety net." He says many people are seeing their credit limits reduced.
Credit Card Approvals Become Rare
"Cards that the most likely to be affected are cards that are rarely used or are inactive. That's because -- generally speaking -- the banks aren't making any money off of it." He has some advice. "If you're concerned about a card getting closed or a credit limit getting reduced, the best thing you can do is keep using that card a little bit and keep your payments current." Banks don't like risk...and as Schultz always says, "When the economy goes south, available unused credit looks like a whole bunch of risk to banks."
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