Credit Card Companies Changing The Way They Promote Credit Cards
American consumers carry almost one trillion dollars in credit card debt, the most ever in our society. And even though most of the card holders are able to pay off their balances at the end of each month, there are a lot more consumers who are only able to pay the minimum.
The reason is that many of these credit card holders have lost jobs, been downsized, or have otherwise lost some of the income that they were previously making. And after they cover their essential expenses such as mortgage or rent, utilities, and food – they have very little money left over to pay on their credit card bill. In fact, many are close to filing bankrupt.
The fact that the millions of citizens have suffered a decrease in their standard of living has not escaped the notice of the credit card companies. In response, they have already changed some ways of doing business. Two years ago, these companies were sending out billions of pieces of introductory offers for special deals like zero percent interest, to every type of credit risk imaginable.
Today, however, they have become much less aggressive in sending out promotional pieces. Instead, they have markedly modified their business model to where they make much more of their income from penalty fees such as over limit and late fees.
Companies are also becoming stricter as to who they give cards to. Part of this is a reaction to the record number of consumers working with debt negotiators to drastically reduce their credit card balances – causing big losses to the companies. A second reason is simply a rational response to the fact that the economy, in general is still going through a tough recession making potential consumers less credit worthy.
Companies are also becoming tougher about collecting their balances from delinquent card holders, thus making life even more difficult for those in financial trouble.