"Credit card companies getting tougher"

Credit card companies across the UK are continuing to get tough in a bid to try and minimise on the risk of increasing bad debt levels. Over the past couple of months a number of credit card providers have increased a range of fees, charges, and rates in order to compensation for lost revenue, bad debts, and the ongoing effects of the credit crunch that has swept across the country. According to a recent report these card providers are going a step further by increasing stringency when it comes to credit limits and acceptance of applications.

According to UK credit reference agencies many credit card providers have make significant cuts on credit limits for both new and existing customers, thus reducing the chance of being left with increasing levels of bad debt. The agencies also confirmed that an increasing number of applications is being turned down by credit card providers, many of which have become increasingly wary and have increased stringency on acceptance of applications to try and protect themselves further against unreliable borrowers.

One official from the credit reference agency Experian stated: “Most lenders are scrutinising customers’ credit reports ever more closely and on a more frequent basis. Lenders are under pressure to avoid lending to people who can’t afford to repay.”

Another official said: “It seems as if the credit crunch is beginning to cause credit card chaos. 125 fee and rate increases inside two months is quite staggering. With the majority of increases staying away from the headline purchase rates, these fee and rate increases are less in the public view, and often tucked away in lengthy terms and conditions. However they can still make a substantial increase to the cost of using your card.”

Tags: Credit Cards, credit limits