Business and Finance Corner

Banks have announced in August that they are planning on more cutbacks when it comes to credit card limits, as well as offering products to consumers.  The cost of finance for lenders is lowering since the interest rates they are charged are significantly less, but they are not offering this to their consumers.  Instead they are keeping or raising the interest rates that consumers pay, which in turn offers a high profitability.

Given the risk involved in lending money during the credit crunch the credit cards are also changing the limits they are offering to consumers.  More than a million card holders have seen their credit card limits reduced up to 50 percent.  There are less 0 credit card offers. The companies state they look at spending in the previous year and determine who doesn’t need the higher limit.  In some cases it is to get the consumer to begin to use the card again.  Other reasons are to make sure the consumer is not able to spend what they don’t have, and to allow the credit card company to make the most of it.  The Banks have also announced interest rates on overdrafts and personal loans have fallen, so the credit cards have to make up this difference it seems.