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"Problems with credit cards for many consumers"

By admin | December 15th, 2008 | Credit Cards

According to industry officials many consumers are seeing problems with credit cards, not only in the fact that they cost of borrowing on credit cards has been rising despite the base interest rate falling, but also because the tighter credit conditions in the credit card sector has made it far more difficult for many consumers to get their hands on an affordable credit card. This could cause major problems for the many consumers who plan to spend on plastic over the Christmas and New Year period.

The Prime Minister, Gordon, Brown, has already expressed his concern and outrage with credit card firms for fleecing customers at a very financial challenging time, and has said that he wants to see these lenders exercise more fairness with the customers. For many credit cards have put them in a catch 22 situation – they need a credit card to get them through because they have no money, but the cost of borrowing on some credit cards is so high that they will not have enough money to repay their balance if they do use a credit card to fund Christmas.

One industry official said that if consumers wanted to get a decent deal on a credit card in time for Christmas they needed to act fast, and they would need to put in some research, as the number of affordable credit card deals on the market was fading.

He said: ‘They are harder to get unless you have a perfect credit history. The market has changed beyond recognition over the past year. It is a real sign of the new era of tightened credit.’

Another problem is that the many people that get turned down for a credit card in the current difficult financial climate could find that not only do they not have the spending power that they hoped for this Christmas, but that they could damage their credit by failing to resist the temptation to apply to other lenders straight away after being turned down – something that many may decide to do out of sheer desperation.

One official said: If you are declined a new card, the worst thing you can do is start desperately searching around and applying to lots of different providers. ‘Every time you apply for a card it leaves a footprint on your credit file. If you have lots of footprints in a short time, this can act as a warning sign to lenders that someone has troubles.’

He added: ‘The best thing is keep making prompt payments on all your debts so you keep your credit record clean. Pay off as much debt as you can, and then wait. As long as you haven’t had more than two or three refusals in the past two months it is probably OK to apply again in three to six months.’

Tags: Credit Cards

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