A while back I suggested that as part of the financial response to the pandemic recession, that credit card issuers reduce the interest rates that they charge on carried balances. (When Will Congress Address Credit Card Debt?) After all, other interest rates (including home mortgages now) are at historically low rates. Yet, credit card rates remain unchanged.
Instead of helping consumers, banks are covering their asses. They are lowering available lines of credit or flat out canceling credit cards entirely. And I’ve actually had that happen to me. One of the cards that I carry for US travel tied to a hospitality company cut my line of credit about in half…supposedly because I didn’t use it enough. ???. Despite my credit rating being pretty solid and my income is as well.
One in 4 Americans with credit cards said they had an account involuntarily shut down from mid-May to mid-July, while 1 in 3 said their credit limit was reduced, according to a new report from CompareCards.com that surveyed 1,003 credit cardholders.
“These are really big numbers,” said Matt Schulz, chief industry analyst at CompareCards. “It means that an awful lot of Americans had one of their financial security nets taken out from under them in one of the most difficult economic times in American history.”
“This is, in a lot of ways, a much bigger issue today than it was in the Great Recession,” Schulz said. “It makes sense that banks are taking an even harder line with lending because there’s so much that they don’t know, and they’re so nervous about risk.”
Yes, it makes sense that banks are nervous about risks. There are a lot of unknowns here. But, everyone keeps saying that we are all in this together. Banks continue to boast about being here for us in the pandemic. But they need to put their money, literally, where their mouth is this time.
Instead of making life harder for Americans, banks should be striving to help us survive the economic issues around the fall out. Lowering interest rates, removing late penalties, and easing up on minimum payment requirements would help.
And the government can still do something as they build their next pandemic stimulus package. It’s not too late for that.
Hell, we bailed them out during the Great Recession…they kinda owe us right now!