Credit Starts to Tighten as Job Losses Remain High
The Federal Reserve reports this week that Americans owe one trillion dollars in credit card debt. They are saying that is a record high. Delinquencies, or overdue payments are rising, especially among young people. Also, in this Fed study, they estimate that more than 20% of student loans are more than 90 days late on payments.
We all love our credit cards, and with the pandemic causing such high unemployment, many are using them just to survive. Now with the pandemic rent and unemployment subsidies ending, people are fighting to keep their heads above water. Lending institutions are reducing credit limits or cancelling credit cards all together. That credit limit you thought you had, has probably been reduced. And it is possible to see your credit score drop as your available credit is reduced.
Banks in these dire times are all about managing risk. Things are changing so fast they do not know who is a risk, and who is not right now. Detroit Free Press reports "Some banks will go at this with a scalpel and some will go at it with a flamethrower." 1 in 3 cardholders said they had their credit limit reduced on at least one card in the past 60 days, based on a new survey released Wednesday from CompareCards by LendingTree. Most credit limits were cut by $1,000 or less. But many who have higher credit limits saw bigger cuts. More than 1 in 5 limits were reduced by at least $5,000. When times are tough, finding credit options is not always an easy task. Probably a good idea to check your accounts to see if there have been any changes in your limits, it is always good to know where you stand with your credit providers.