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Wednesday, Jan 23, 2008
Credit cards aimed at those with poor credit records have grown in popularity over the last year as the credit crunch starts to bite.
Results from Vanquis Bank released late last year showed the number of consumers choosing bad credit credit cards rose from 251,000 in January to 310,000 at the end of November.
The uptake of credit cards aimed at those with poor credit records points to increasing numbers of consumers being turned down by mainstream lenders.
Vanquis itself – owned by Bradford-based lender Provident Financial – turned down some 70 per cent of credit card applications.
The increase in people being turned down by mainstream lenders is being seen as a result of the credit crunch – as banks become more cautious about who they lend to.
A new survey by the Bank of England shows lenders reduced the availability of unsecured credit - such as personal loans, overdrafts and credit cards – over the last three months and they intend to continue to do so in 2008.
Lending on both credit cards and loans will be cut through banks and building societies tightening their credit scoring criteria – meaning more of those with less than perfect credit scores will have applications turned down.
However, demand for credit cards has risen over the last three months in the run-up to Christmas and is expected to stay strong in the new year – so more people can expect rejection letters when applying for credit cards, making bad credit credit cards a more attractive option.
Consumers are warned while bad credit credit cards offer many of the same features of standard cards, they do charge higher levels of interest.
Source: http://www.myfinances.co.uk/news/ |
