Credit card issuer actions have sweeping effects

05.05.09
By Lewis Green

Keeping tighter reins on everyday spending and balancing the family budget to ensure funds are available for home loan and student loan payments are increasingly the focus for many American households.

Since the credit crisis began, many American families have found themselves struggling to keep their jobs and their homes. Late payments and outstanding credit card bills have already taken a toll on the credit score of many individuals.

Now, data from Equifax's March Credit Trends Report shows how the actions taken by credit card issuers have affected the broad population.

The report, as detailed by Reuters, shows that in March, over 20 million credit card accounts were closed and in the early months of the year fewer new credit cards were issued to consumers.

Closing accounts has been one method credit card companies have used to reduce their exposure to those considered riskier borrowers. Credit card companies, faced with growing amounts of uncollectable debt, have said these measures were necessary to regroup from substantial losses.

The Reuters article on Equifax's findings also showed that 4.7 percent of payments due on bank-issued credit cards were at least 60 days late - a substantial increase from the same period one year earlier.

This data follows more grim news for credit cardholders and the companies that issued the cards. Fitch Ratings issued a special report on Monday that said credit card losses are poised to increase in the coming months.

The Equifax credit trends data also revealed that homeowners across the credit spectrum were having trouble making payments on their mortgage loans.

Overall, nearly 7 percent of homeowners were 30 days or more behind on home loan payments - a jump of nearly 60 percent from March 2008.

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Card issuers have closed millions of accounts