Media Offers Advice On How To Get a Credit Card, But Not the Debt that Follows
A recent Forbes article reports helps consumers figure out how to obtain a credit card, opining that lenders are being more strict with who gets one of their shiny pieces of plastic.
But according to creditcards.com, there are more than 400 million credit cards in circulation in the United States and industry experts believe that companies are sending out offers at record levels.
Many people believe that the amount of credit available in the United States has actually increased, which has led to a decline in the number of Chicago bankruptcies reported in 2011.
Typically, in times of tighter credit, more people are willing to consult with a Chicago bankruptcy lawyer and go through with the process than when more credit is available. That's simply because when more credit is available, people will take it, especially if they are in a financial bind.
But this isn't necessarily a good thing. When these credit companies extend offers to consumers, it's to make them money, not to actually help the consumer. These companies aren't designed to lend out money with zero return. That's why they pack in hidden fees that crop up when payments are late or if certain requirements aren't met.
Interest rates can spike at any time and the "perks" and "rewards" offered typically require huge amounts of spending so that even if a person gets the perks, they end up paying for it i the end. It's not really a perk, after all.
The Forbes article goes on to say that a 720 credit score used to be considered good, but the author believes that credit card companies are considering 750 an "excellent" score. The analysts in the article believe that credit card companies are being more conservative.
But that mainly applies to simply handing out premier interest rates. Anyone can get a credit card and fall into the traps set by card companies. Other news media have reported that there are record numbers of credit card offers being mailed out daily.
Some tips for consumers searching for a credit card:
Payment history is key
Experts believe that people who have a long history of paying their cards on time will likely be able to obtain new cards.
Credit length, diversity is important
Credit diversity means holding different types of loans -- car, home, credit card, store credit. Length of credit simply means showing that you can make payments for years.
Debt-to-credit ratio
Credit card companies don't like to see that a consumer uses one card exclusively and has little on others. They would prefer to see your debt stretched out.
Students who have never owned a credit card before and those under 21 have had difficulty obtaining credit cards since the passage of the CARD Act in 2009. Under the act, they must have co-signers unless they have enough assets or income to obtain a waiver.
Some who get rejected for cards might consider going to a bank and starting a checking account and later seeking a credit card through their bank. There are options, but consumers must be careful. While credit card companies seem to be showing some restraint as far as who they provide cards to, they still want to maximize their business and get as many cards out there as possible. The more cards, the more profit. And that means the more trouble for consumers.
If you need to speak to a Chicago bankruptcy attorney call the DebtStoppers Bankruptcy Law Firm at 800-440-7235 today for a free debt analysis. Call 800-440-7235.
More Blog Entries:
Fed Plan Could Lead Chicago Consumers Into More Debt: October 5, 2011
College Credit Card Debt in Chicago Can Get Out of Control Without the Right Plan: September 14, 2011
Additional Resources:
How To Get Approved For a Credit Card, by Zack O'Malley Greenburg, Forbes.com