Dallas, TX (October 30 , 2008) – In the midst of the economic downturn, the U.S. credit crunch is beginning to have a dire effect on consumer's wallets, and they're beginning to notice their resources depleting.
Credit card companies are making it harder for consumers to rely on credit for purchases, according to a recent article in The New York Times. Interest rates are skyrocketing and consumers' credit limits are being reduced.
"Even people who have fairly good credit are being affected," NCPA Senior Policy Analyst, Pam Villarreal said. "Lenders are tightening the strings on nearly ANYONE who has credit cards primarily because credit card companies don't trust people's ability to pay the money back."
It's estimated that lenders wrote off $21 billion in bad credit card loans in just the first half of 2008 as more people lost their jobs and defaulted on their loans, according to The Times.
Villarreal offers some tips for consumers during this credit card crisis:
1) Now is a good time to pay off credit cards before interest rates increase. In the next several months, credit card holders' interest rates will go up, if they haven't already, causing their payments to increase as well . "It's never a good time to carry credit card debt," said Villarreal, "but now things are getting worse. Pay off the cards."
2) Consumers should be more mindful of using credit cards for frivolous purchases as it becomes harder to pay the money back. "Using your credit card on everyday items will end up costing you much more now than in past months, and it's not worth ruining your credit score," Villarreal said.
3) If you must use credit cards for necessities such as food and gas, try to pay those items off as soon as possible. Lenders are reducing credit limits, so a once $10,000 credit limit may now be $7,000. Lenders have 30 days to notify customers of any changes they make to their accounts, but they often wait to do so after taking action. "It's now easier for consumers to go over their credit limits, so purchases should be paid off immediately if possible," Villarreal said.