Credit Rule Changes Impact Clients

The credit granting world has undergone incredible changes in the past 18 months. Zero percent financing on auto loans, no matter what you’ve seen claimed on television, is nearly extinct.

If you read the fine print, the disclaimer that flashes by during the commercials, that’s only for “well qualified buyers.” Try to find one these days. They’re as scarce as hen’s teeth.

Nothing down loans to buy homes are no longer on anyone’s map. Low interest carrying charges on credit cards just for signing up have gone the way of the dinosaur.

With the Big Three automakers suffering economic problems, even co-signing an auto loan for a relative or friend has become more difficult. And people with great credit scores are suddenly, without warning, finding their low interest credit cards being raised to insultingly high levels. In nearly all cases involving credit card balances, the minimum payment has doubled in the past year.

According to an ABC News report, with no warning Chase Bank recently more than doubled the minimum payment of their credit card holders from two percent to five percent of their monthly balance.

What’s going on is that credit lenders are running scared. They’re frightened by the sub-prime mortgage meltdown, according to many industry analysts. And they’re looking at their billions in unsecured debt and rethinking their financial strategies.

According to Money Magazine's Donna Rosato, “Credit card companies are tightening up their standards because they are losing money.”

Today, many of the major credit card companies have suddenly raised interest rates on card holders. Others are trying to drop customers altogether. “American Express, for example, is paying people or giving people $300 gift cards as an incentive to pay down their account and close their account,” Rosato said.

The message from the ongoing financial upheavals, coupled with the dramatic changes in the credit markets is clear. We must all take control of the financial side of our lives, charge less and save more.