Is the Wall Street Bailout Affecting Credit Card Applications?

Americans have never been so in sync with the American economy. In fact, as a nation, we have never been as educated as to how our economy works, our place in the global economy and how changes to within our country’s lending institutions affect us, on a personal level. As this isn’t an economics lesson, I won’t bore or condescend you with the same information that has been drilled into your head for the past week and a half. What I’d for you to take from this article is the real time, real life impact that a fiscal meltdown will have on you and your personal, day to day finances. At the heart of your potential fiscal woes may very well be the inability to use your credit cards or obtain new ones or even extend credit. As things trickle down, banks are coming up with less and less money to offer out for credit; that immediately translates to less available credit card offers. While it’s not clear that you’ll get less of them in the mail this week, the approval process is a door that may be swinging one way for a while. In terms of risk, lenders are extremely afraid of taking new risk on to add to their current risk portfolios. In fact, there has even been talk of acquiring banks eliminating the available credit for existing customers. As this is just rumor at this point, this is a very real possibility that banks can enact. It’s simple, if you multiplied the number of customers that an acquiring bank has by the available balances on their credit cards, you will have one hell of a risk for that lending institution. With a slow economy, high unemployment and winter as well as the holidays coming, the possibility that banks will incur more bad debt without even welcoming any new debt , is a reality.

The chances that we’ll ever see a creditless society are seemingly non-existent; however, as credit tightens up, the available credit that individuals have at their disposal becomes less. This credit becomes redistributed as credit Americans begin to use credit for everyday needs and even to pay bills, versus convenience and luxury items. Merchants, especially ecommerce merchants will suffer in a slow market like this, as items purchased online tend to be more a want and less need based. To combat this type of thing from happening, the ecommerce and more specifically credit card processing industry has acted as they have acted before when there has been a fear of increases in government regulations or a change in policy, as well as an ever changing economic landscape. Lately, moves offshore to international lenders have proven to be successful, profitable and secure for merchants. Those are three words that came if only at a steep price to those same merchants by doing business domestically. For processors and merchant service providers, the ability to source the cheapest, safest and simplest transaction processing for their clients is an entire industry in itself. As we move forward, as our economy transitions into whatever it will be and as new challenges arise, for business owners and credit card holders, the ability to process monetary transactions electronically is an capability that we cannot afford to lose.