• Canadian Capital One credit cards

    Canadian Credit delinquencies rising
    Deloitte warns -Canada

    Consumers are going to get hit at the credit cards, it seems, whether they have good credit or bad!

    According to this Financial Post article: Canadian credit-card users could face a wave of credit checks, limit reductions and even account closures as issuers fight against a rise of between 5% and 10% in the delinquency rate.

    I'm thinking that what the credit card companies will do is go through a filtering process of who is potentially higher risk credit card holders and then reduce their credit limits, do credit checks accordingly.

    It might be worth a phone call to your credit card company and your bank if you're concerned about having your limit lowered on your credit cards.

    I had it happen to me in the past... a line of credit was actually shut down because my credit score dropped. My payments were current, and there were no problems with the account at all. The only difference was that I was showing a lower equifax score. (It was probably due to me having 45 inquiries on my credit report. I didn't understand the term credit shopping at the time )

    EXAMPLE: If somebody has a credit card with a limit of $20,000 and they're only using $3,500 of that limit on a consistent basis... at the same time their credit score drops ... this might be a situation where the credit card company feels that they are over exposed and may reduce the credit limit down to a limit matching that person's current credit score.

    Bottom line, the credit card companies need to make sure that they're not taking too much risk their current clients.

    Financial Post
    Canadian credit-card users could face a wave of credit checks, limit reductions and even account closures as issuers fight against a rise in the delinquency rate to between 5% and 10% from 4% before ...

    Canadian credit-card users could face a wave of credit checks, limit reductions and even account closures as issuers fight against a rise of between 5% and 10% in the delinquency rate.

    Consumer debt on credit-cards issued by Canadian banks has soared nearly 40% since 2004 on the back of loosened standards, according to accounting giant and advisory firm Deloitte.

    Now, it's delinquencies that are rising. The average loss rate of between 3% and 4% has risen by between 50 and 100 basis points, according to the firm's new report, Uncharted Waters for Credit Issuers, released Tuesday.

    Deloitte puts the total value of outstanding consumer debt on credit cards at $80-billion, putting as much as $800-million at risk of write-offs in the next year if issuers "fail to take action immediately.


    Article Created: 2009-02-03
    Article Updated: Not yet updated.

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1 Comments
On Dec 12, 2012, jj Said:
Put a date on your articles so that people know when it was written! How else will someone else understand if the information is recent?