The nation’s largest banks have green-lighted a flood of new credit card solicitations that are probably showing up in your mailbox. But it’s important that you don’t treat this as an excuse to get yourself into debt.
We went through a period where banks were only doing a tiny fraction of the amount of solicitations they historically did. In fact, there was an 18-month period where they were closing accounts and reducing lines of credit with no notice.
Very often I heard from people traveling on business who had their cards shut down out of the blue while they were on the road. That’s one of the reasons I always recommend that you carry two credit cards from two separate issuers when traveling.
Now The Chicago Tribune reports that the pendulum has swung completely the other way. Solicitations to sub-prime borrowers are up 65% in just the first five months of this year. Moreover, banks have issued 4.5 million cards to sub-prime borrowers just this year alone.
Equifax reports that solicitations aimed at the general market are up 30% from a year ago. Overall in the marketplace, there are 15 million new credit cards in use, which is the highest number of new accounts since the financial crisis.
We have done a good job as Americans reducing credit card debt, most of which was because we started paying down our debt, as opposed to defaulting on it. Now that the green-light is back on with all the solicitations, please be very careful with this newfound freedom. Don’t get yourself back into what we were in with so many people way in over their heads.