A news article from Oct. 27 has made a loaded statement; it claims that banks are beginning to issue credit cards again like they did in the year 2007. For many years, banks had decided not to lend very much and most of the teens and young adults in the millennial group have paid their bills with debit cards and gone without credit. Now, banks are lending again, and with that, there is a potential for good credit or bad credit mistakes.
So far in 2016, banks have been issuing credit cards at rates on par with those before the 2008 financial crisis. Credit card debt has been climbing and reached a high of $975 billion in August. Analysts believe it may reach $1 trillion by early next year.
Credit cards given out today have many rewards that make them enticing to people young and old. They give away rewards based on spending, and you may get free flights, free hotel rooms or discounts just for using your credit card regularly and paying your bill. Financial institutions are piling on those rewards hoping to pull more customers in from the affluent and middle-class groups.
In fact, if you have good or better credit, this is a good time to seek out a credit card. Most people who want one already have one, so the companies now have to draw in those who could take on a second credit card. This is resulting in companies providing an excess of rewards to gain new customers.
Lending to consumers who don’t have the money to pay back credit debt can cause trouble. Even those who can pay now could have a life-changing event that makes it difficult later. If you want to reap the rewards of these benefits, make sure to make your payments every month and to pay off the card each month if possible to avoid paying interest. If you fall behind, you can seek out debt management advice early from legal professionals who can help.
Source: The Boston Globe, “Banks are issuing credit cards like it’s 2007,” Deirdre Fernandes, Oct. 27, 2016