The Future of Credit Cards

It is no secret that the recession has hit the credit card industry exceptionally hard. Banks and credit card issuers are scrambling to collect on debts owed to them by cardholders. There’s no question that credit card companies will be issuing fewer cards in the future.

The entire business model of the banks and financial institutions that issue credit cards is based on a rather substantial risk. And it is that very risk that has gotten credit card issuers into the precarious situation that they currently find themselves in.

With unemployment rates reaching record highs and small businesses failing in record numbers, credit card defaults and chargeoffs have increased to the point where the very survival of the credit card issuers is in question.

For anyone that has less than perfect credit, they will find that getting a credit card now and in the immediate future will be an increasingly difficult, if not impossible thing. Perhaps it’s an exaggeration on my part to say that perfect credit will be required to receive a credit card but I don’t believe anything less than a good to excellent credit history will be enough for approval.

Consumers that have poor credit histories will find that credit card companies, unlike in years past, will not take on the risk of extending them lines of credit. Frankly stated, they have been burned by defaults to the point where they can no longer take it.

Likewise individuals with little or no credit history also find themselves out in the cold if they should apply for a credit card. College students that used to have incredibly easy access to credit will now need to either prove that they have the ability to pay off a line of credit, or have a cosigner to take responsibility for their payments if necessary.

Of course, as we all know in this modern day and age, paying with plastic is almost a necessity if you want to make a purchase online or over the phone from a catalogue for instance. There will be some alternative forms of payment for individuals that can’t get credit cards.

Debit cards for one are most definitely a viable alternative. You can also go to any supermarket and purchase a stored value card that allows you to put money on it that you can make purchases with anywhere Visa and MasterCard is accepted. We believe these types of payments will become increasingly popular as an alternative to credit cards.

Related Information:

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