Consumers already in credit card debt steer clear of borrowing
For the first time since the 2008 recession, banks and credit card issuers are lowering their standards for consumers who wish to borrow. Prior to this, lenders had tightened their requirements, making it more difficult for consumers to be approved for loans if they had outstanding credit card debt.
Bloomberg reports that lenders have been hoping to recruit more customers by loosening restrictions, but thus far they have been unsuccessful. Record-low interest rates have failed to attract consumer attention. Since 2008, business loans have decreased to $1.24 trillion from $1.62 trillion. Americans have become more concerned with rebuilding their savings and credit history than borrowing more money.
“The takeaway is it’s mainly a demand problem, and not so much about credit supply,” UniCredit Global Resarch chief economist Harm Bandholz told the news site. “The private sector is not responding to low interest rates and easing credit conditions.”
Consumers should not borrow without ensuring they have the financial means to repay debt in a timely manner. Loan and credit card debt can cause score damage and result in hesitation from lenders in the future.