Card Issuers Cutting Credit to Customers

I wrote about the problems credit card issuers will face in the current recession the other day. 95,000 people read the post. We talked about it on our YouTube show, What Are Your Thoughts, this week also. It’s an issue that I think is still under-appreciated by the markets right now.

This morning we learned that another 4.4 million people filed for unemployment last week. That brings the five-week running total to 26.5 million people. These numbers are absolutely astounding.

Bloomberg reports that two large credit card issuers, Discover and Synchrony, are already tinkering with the credit limits they offer to customers in light of this new reality:

Discover Financial Services just became the largest lender yet to acknowledge it’s begun reining in lines of credit. In a regulatory filing late Wednesday, the firm said it’s also easing off efforts to sign up new customers and that it expects to take a hit from programs letting existing borrowers skip payments or delay the accrual of interest.

and…

The announcement came a day after Synchrony Financial, the company behind cards for J.C. Penney Co., Gap Inc. and American Eagle Outfitters Inc., said it will try to stem losses by closely managing customers’ accounts. In a conference call with analysts Tuesday, Chief Financial Officer Brian Wenzel said the firm is using its own vast trove of data, as well as information from credit bureaus, to “dynamically reevaluate a customer’s creditworthiness.” That means some may be allowed to spend more, but others less.

These defensive moves are pretty much mandatory. A household running out of money for expenses this month is not racing to pay off its American Eagle Outfitters card. And the card issuers know it. Here’s Discover’s press statement: “Due to the nature and novelty of the crisis, our credit and economic models may not be able to adequately predict or forecast credit losses. The pace of recovery is uncertain and unpredictable.”

Source:

Credit Cards Start Cutting Limits for People Facing Tough Times (Bloomberg)

Read also:

The Next Leg Down Will Involve Credit Cards (TRB)

What's been said:

Discussions found on the web
  1. eatverts commented on Sep 23

    … [Trackback]

    […] Find More on that Topic: thereformedbroker.com/2020/04/23/card-issuers-cutting-credit-to-customers/ […]

  2. immediate edge bitcoin commented on Sep 28

    … [Trackback]

    […] Find More here on that Topic: thereformedbroker.com/2020/04/23/card-issuers-cutting-credit-to-customers/ […]

  3. Skrotbilar hämtas i Göteborg commented on Nov 21

    … [Trackback]

    […] Find More on to that Topic: thereformedbroker.com/2020/04/23/card-issuers-cutting-credit-to-customers/ […]

  4. Hybrid regression testing commented on Nov 25

    … [Trackback]

    […] Info to that Topic: thereformedbroker.com/2020/04/23/card-issuers-cutting-credit-to-customers/ […]

  5. rbc online banking sign in banking commented on Dec 24

    … [Trackback]

    […] Info on that Topic: thereformedbroker.com/2020/04/23/card-issuers-cutting-credit-to-customers/ […]

  6. replica richard mille commented on Jan 01

    … [Trackback]

    […] Read More here to that Topic: thereformedbroker.com/2020/04/23/card-issuers-cutting-credit-to-customers/ […]

  7. https://www.bestswiss.watch/ commented on Jan 14

    … [Trackback]

    […] Read More here to that Topic: thereformedbroker.com/2020/04/23/card-issuers-cutting-credit-to-customers/ […]

  8. greensboro auto body repair shop commented on Jan 22

    … [Trackback]

    […] Read More Info here on that Topic: thereformedbroker.com/2020/04/23/card-issuers-cutting-credit-to-customers/ […]

  9. lace front wigs commented on Jan 24

    … [Trackback]

    […] Find More to that Topic: thereformedbroker.com/2020/04/23/card-issuers-cutting-credit-to-customers/ […]

  10. royal bank of canada commented on Jan 26

    … [Trackback]

    […] Find More Information here to that Topic: thereformedbroker.com/2020/04/23/card-issuers-cutting-credit-to-customers/ […]