The credit card industry has faced a series of serious blows as of late. First, the US government moved to reduce the interest rates that credit card companies could charge customers. Then, millions of customers began defaulting on their debt. It seems that the most plausible response is to close the account of any customer that poses a risk – even for those that have recently paid down their debts.
Apparently, the simple action of asking for a credit line increase can prompt some credit card companies to close established accounts. Bank of America recently closed the accounts of more than 50,000 customers after taking a closer look at them. Customers that have fallen behind on other bills might find that their credit limits have been severely reduced while others have had to find out the hard way that their business is no longer wanted.
Because credit card companies are less likely to issue unsecured lines of credits to those with poor or nonexistent credit, they are focusing on the sub prime market again. Consumers with bad credit are frequently able to get secured credit cards, and they also are required to pay high yearly account maintenance fees. If one of these customers defaults, the credit card company is able to simply keep the deposit fee and then go after any extraneous fees that might have been assigned to the account. Some consumers are able to get their accounts reinstated if they are able to get through to the right entities, however, most view this strategy as a long shot.