Credit Cards -
Credit card rejections on the up - 20/05/2008
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Since the credit crunch, lenders have now become very wary as to who they loan money to and offer credit cards to. Recent research into the credit card market suggests an increase in the number of people being denied on application.
Approximately 1 in 10 applicants will be turned down for a credit card as a result of the tighter lending criteria currently being practiced by most banks. Credit card company, Egg cancelled the account of 161,000 customers believed to be high risk.
After being taken over by City Bank last year, Egg’s cancellation trend does not seem to be changing. Customers are now sparking rumors that their credit cards have been terminated because they do not make the bank enough profit, not because they cannot pay the credit back.
It just so happens that banks are gaining an excess of £530 million in profit from extra fees charged on credit cards - Fees that have recently gone up. According to one financial website, the number of denied credit card applications rose by 17% over the past 6 months.
Another reason why credit card companies like Egg are increasing fees and canceling customers is because it has become increasingly difficult for financial houses to borrow from each other. Meaning they have to recoup these losses via new means – most of the times meaning the customers.
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