Credit card issuers limit approvals, lower credit lines

Think the mess on Wall Street hasn’t hit home yet? Think again. For millions of consumers, today’s economic crisis means fewer credit card approvals, lower credit lines, and higher balances.

Credit card banks clamp down
According to a 2008 Federal Reserve survey of senior loan officers, 67% of credit card banks have tightened the standards to be approved for a new credit card. 57% of banks have increased the minimum credit score requirements for their credit cards.

But the restrictions don’t just affect consumers shopping for a new credit card; existing cardholders are affected too. 47% of banks surveyed said they have changed the terms on existing cardholders’ accounts, and 37% of banks raised interest rates.

What can you do?
If your current credit cards have raised your interest rate, lowered your credit line, or otherwise adjusted your terms, call them up and negotiate with your credit card company! Especially if you have good credit, you have more power than you think simply by saying “I’ll never use your card again”.

If you’re looking for a new credit card and have good credit, you’ll still find cards you can get approved for that have good interest rates—including 0% balance transfer offers. Don’t be surprised, however, if the credit line you are granted is much smaller than cards you have gotten in the past. Your credit may be fine—the banks just don’t have the money to lend.