Credit Card Lenders Tighten Up
April 4, 2008
Credit card companies are beginning to report more and more delinquencies on their consumer accounts. These delinquencies are causing some major losses to some of the biggest credit card lenders, and they are making adjustments to resolve the problem as best they can.
This year alone, it is estimated that credit card companies may need to write off more than 7 percent of their portfolios. This is in comparison to 5.21 percent in 2007, according to Fitch Ratings.
Aaron Bresko, director of credit and portfolio management for the Boeing Employees Credit Union, which offers banking products to Boeing Co. employees, family members of employees and Washington residents, recently remarked: “We are a little more conservative with our pre-approvals.”
They are not alone. In fact, overall, fewer credit card lenders are approving new applications than were last year.
“No question there is tightening in the market,” said Robert McKinley, president of Cardweb.com and Cardtrak.com, industry research Web sites. “Approval rates are not as aggressive as they were even three or four months ago.”
An interesting note to all of this is that the volume of direct mailings for credit card applications has dropped by 10 percent during the fourth quarter. This is a reversal of a 10-year trend, said Ben Woolsey, director of marketing and consumer research at Creditcards.com.
This decrease in direct marketing for new customers is seen as an indication credit card lenders are now being more selective on who they want as new customers.