Credit Card Delinquencies Continue to Fall as Creditors take Measures to Protect Themselves
Credit card delinquencies fell to their lowest level in eight years in the first quarter of 2010, according to the American Bankers Association. In addition, nearly all major credit card companies experienced nearly five months of improvements during that same time period.
These excellent numbers are likely a result of two factors: consumers are becoming better equipped to handle their debt; and creditors are taking measures to protect their financial interests.
Some of the changes creditors have made as a direct result of the national recession and credit crisis include the following:
- Creditors have lowered credit limits across the board, thereby preventing consumers from overcharging on their credit cards. You may have received a letter from your credit card company regarding this change. You may be able to contact your credit card company and dispute this change, particularly if you have a strong history with them.
- Creditors have begun closing accounts due to inactivity. Many creditors have cut the fat, so to speak, by simply closing accounts that are not being used anymore. If you have a credit card that doesn’t get used anymore, you may have received a letter from your creditor announcing that they will close your account. You may also have received a letter from your creditor stating that “inactivity fees” will soon apply if you don’t use your credit card.
The best rule of thumb is either to cancel the card you no longer use, or to make a purchase on it at least once or twice a year to avoid the dreaded inactivity fee.
- Creditors have written off many of their uncollectible accounts. For many creditors, the process of tracking down severely delinquent customers is simply not worth it, financially speaking.
- Creditors have begun approving credit applications for individuals with the best of credit. Risky credit card applicants need not apply under the eyes of many creditors. The risk of approving an individual with iffy credit simply isn’t worth it anymore to creditors. In other words, don’t expect an approval letter unless your credit score is clean.
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