The credit industry has taken a big hit recently as the credit crisis is clamping down on the US and world economies. Many companies are feeling the credit crunch, and as a result are changing their business practices. This week, American Express gained government approval to classify their company as a bank in order to more easily apply for economic bailout money.
The credit crunch restricts lending
The credit crunch is affecting businesses and consumers alike. On the business end, many companies are finding it difficult to obtain large loans in order to expand operations, or in some cases pay operating expenses. Many companies are in serious financial trouble and layoffs are a distinct possibility. Consumers are also finding it difficult to obtain loans to purchase large ticket items such as automobiles and houses. While I am not a fan of unrestricted lending and spending, stopping the flow of credit will kill our economy.
Credit Card programs changing
Many credit card companies have been hit by this financial crisis as well and are cutting costs and raising fees. Some of the best rewards cards are also being eliminated. Recently, Chase got rid of the Chase Freedom® MasterCard card, and replaced it with the Chase Freedom® MasterCard Card, which has a similar, but slightly less generous rewards plan. It appears as though several other credit card companies are planning on making similar cuts.
Many companies are also getting rid of generous balance transfer deals. A little over a year ago, it was relatively easy to find free, 0% balance transfer offers. Many people would transfer their credit card balance at 0% interest and invest the money in a high yield savings account, while maintaining minimum payments on their credit cards. As the credit industry has tightened lending, these free 0% balance transfer offers are becoming more difficult to find.
Credit card bonus offers may be the next place that credit card companies look to save money. With these changes happening, it may be best to take advantage of deals before they are gone.
Take care of your credit score
The credit crunch is affecting all aspects of our economy – from businesses, to employment, to consumers’ ability to spend. No one knows when the credit crunch will end and it may get worse before it improves. Your credit score is an asset and you need to treat it as such. As the credit crunch continues and the economy worsens, your credit score will become more valuable. Now is a good time to understand your credit score and work toward improving your credit score. You owe it to yourself, especially in a bad economy.