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Card firms unhappy with credit-savvy customers
You would think that the credit card industry is in great shape. I mean there are more people using their credit cards for miscellaneous purchases than ever before. And the industry has managed to rope in young college-goers as well. So, what could be the reason for the worry among industry circles?
There is a very interesting phenomenon going on right now that is troubling credit card companies. Although Americans are deeper in debt than ever, they are paying off bigger portions of their monthly credit-card bills. And timely payment of bills is one thing card issuers don’t like. That’s because card issuers profit from interest on unpaid balances. In the past, when interest rates crept up, fewer cardholders could afford to pay down balances. Azcentral.com reports:
Although consumers are using plastic for more of their daily purchases, they are giving card issuers fits by juggling their debts more shrewdly. When cardholders are hit with high interest rates, they transfer balances to cards at lower rates. And in recent years, more consumers wiped out credit-card debts by borrowing against their homes.
Read more: Card balances shrink, as do creditors' profits
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I think this is a great news for consumers.I have hard many times that comsumers over use their credit cards and go bankrupt. This really makes me sad. Credit card is a very useful thing only when it is used sensibly. I think now American consumers have become more conscious about their credits and use of credit cards.
Posted by: Razib Ahmed | Jun 7, 2006 12:28:45 PM
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