Yesterday, the default rate for credit card users reached 10 percent and more at key issuers such as Bank of America, American Express, Citi, and Capital One, according to Reuters.
Whether Americans can pay their credit card bills depends largely on whether they have jobs, and thereby income. With unemployment set to go higher, banks and credit card companies are getting jittery. So they’re cutting limits to even good customers who potentially can become a bigger risk.
So, for someone paying just the minimum on credit card balances, watch out. While you used to be the banks’ ideal customer, you have suddenly become a liability. Your regular minimum payments and revolving balance used to be a major profit center for tthem. No longer. And, with pending credit card reform, banks might be tightening available credit anyway.
What to do?
1) Wean yourself from those credit cards.
Pay down credit card balances, keeping your balance-to-limit ratio as low as possible.
2) Track your credit score.
Get your free (once a year) credit report at http://www.annualcreditreport.com