Consumers looking toward new credit advised to remain cautious
Since the collapse of Wall Street, Americans have been less eager to borrow as they attempt to relieve themselves of existing credit card debt. However, since the passing of the Credit Card Accountability, Responsibility and Disclosure Act, consumers had reason to regain confidence in the industry.
Financial experts say consumers should keep a few things in mind before signing up for new credit, however. Lenders are more inclined to give lower interest rates and annual percentage rates to applicants with high credit scores. Monitoring credit at least a month in advance can help consumers make sure they meet the requirements of issuers, FOX News reports.
Individuals that close old accounts can also appear as less of a risk to lenders, but FOX News warns that ending a card can harm a credit score by making it appear that a borrower has maxed out. Before applying for a new card, experts advise consumers to negotiate with their old credit card companies first for lower fees and rates.
New legislation is expected to take $11 billion a year from credit card companies for the next five years. Analysts warn consumers looking into new credit cards that many are expected to raise fees and rates in the near future.