Credit cards 'are the next credit crunch'

12/03/2009

A top American financial expert has warned that "credit cards are the next credit crunch" and could worsen the current economic downturn.
Meredith Whitney, a banking analyst, said that credit card providers were currently looking to crack down on customers who represented a risk to lend to.

This follows a 15-year period, before the beginnings of the credit crunch, where customers were able to borrow easily through their cards - swelling their personal debts in the process.

Writing in the Wall Street Journal, Ms Whitney warned that the crackdown could represent "taking credit away from people who have the ability to pay their bills".

In turn, this sudden unavailability of credit card borrowing would hit consumer spending hard - making the recession even worse than it was before.

Credit card firms are currently looking to increase their rates for customers and are rejecting card applications from those they see as bad credit risks outright.

Meanwhile, the economy as a whole has been shown by official figures to have fallen into recession - with many analysts predicting no improvement until next year.

Tags; Debt Management and Banking, Young Family Finances, Credit Card Lifestyle,

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