Nearly 60% of consumers carried credit card debt before coronavirus and now, with sky-high unemployment, that number is only expected to rise.
Banks are getting nervous about credit card lending and they’re starting to cut back, according to industry experts.
“For a lot of people a credit card is an emergency fund of sorts,” said Ted Rossman, credit card analyst.
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Rossman says when credit card lenders get nervous, they reduce their risk.
Banks will start to cancel dormant accounts.
“The worry is that someone who never uses this particular card then loses their job, gets into trouble and runs up a lot of charges they may not be able to pay back,” Rossman said.
If you want to keep your card, Rossman says start using it, even for small purchases. It can help trick the bank’s algorithm into thinking your usually-dormant card is an active one.
Rossman said banks will also start slashing credit limits on cards that are close to maxing out.
“There’s the distressed side of things. If people are really up against their means, banks are worried they may not get paid back,” he said.
To keep your credit limit, pay down your balance even a little bit, Rossman said. He says banks are more comfortable if there’s wiggle room between your credit limit and what you owe.
Finally, Rossman said if you are struggling to pay your credit card bill, call and ask for help. Don’t ignore the problem.
“What you don’t want to do is fall behind because then you’re in defensive mode and they’re not going to be as generous with you,” he said.
If you can’t pay your credit card bill due to coronavirus, be sure to tell your credit card company. That way, they can’t report a missed payment to the credit bureaus.