Credit card borrowing being tightened up

Although there have been a lot of press recently about easier credit, the reality may be very different. There may be less good deals available to credit card customers due to providers tightening up on their borrowing.

There are a number of attractive rates on offer, but many applicants will not qualify for them. In addition, the rates that are applied at the end of the promotional period has risen to a record level, even though the Bank of England base rate is still at an historic low of 0.5 per cent, where it has been for the last year and a half.

When credit card borrowing was at its height five years ago, most applicants were successful in their card applications; now, however, the most recent industry figures have revealed that half of the applications made are rejected. In addition, just because you succeed in your application doesn’t mean you will get the advertised rate, many will instead be offered far more expensive terms.

The amount of credit cards in circulation dropped by nearly 10 per cent in 2009, due to lenders making their terms less attractive, while many existing cardholders enjoying good terms have seen their balance limits also decrease.

Sandra Quinn, of the UK Cards Association, commented Lenders are being more choosy and looking more carefully at all aspects of an applicant's credit history . We are a long way from the time when credit was shoved at you from all directions.