January 02, 2009
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News: Credit Card Industry Shifts to Softer Tactics.
Things may be looking up for millions of hard-press credit card debtors at last. Realizing that "You can't squeeze blood out of a turnip," the credit card industry is trying a very different tack. They're actually trying to work with the destitute borrowers who are in the most trouble. They're moving into a mode now where they are trying to help defaulting victims to pay what they can while offering to forgive some of the amounts they know they'll never get. They're stretching out payment terms and agreeing to accept small fractions of the amounts owed while writing off the rest. It's not as though the huge credit card lenders are turning into charities, they're just trying to get what they can and protect themselves from further loss.
Amidst the major storm that they all know is brewing, these credit card lenders are trying to capture what little there still is before some other creditor does. There is also a proactive side of things as well. They believe that the sooner the economy recovers (or starts to) the sooner they can get back into the business of making money. Fresh new borrowers with new terms will be more sober when it comes to being irresponsible and won't mind the higher rates on new charges because they will already be braced and not take the low road of crying ‘foul'. They'll still need the use of credit cards.
The largest of credit card lenders, Bank of America, is one of those leading the way. Even though they have had to raise some interest rates and cut lending amounts, they are also very active in providing their borrowers with some room to move. As has been their practice in the past, in 2008 they began stepping up benign gestures like lowering and waiving penalty hits, lowering interest to those who they believe will try harder to recover and even forgiving some debt to over 700,000 of their customers.