« Win $1,000 for shredding your credit card | Main | Smartphones to replace credit cards in U.S. this year »

January 18, 2011

Banks begin to extend consumer credit, target those with balances

Today all across the country thousands of consumers are receiving a flattering letter, a billet-doux of sorts, that makes them feel accepted and loved by their charming credit card company. The letter, which reeks of enthralling affectation characteristic of a no-good ex hoping to reconnect, informs them that their credit line has been increased, that because of their improved credit or on time payments they can now spend more money they don’t have. The exciting moment causes giddy consumers to forget how bad the relationship was just a few years ago. They begin to daydream about how they will spend this new money—perhaps a trip to Disney, a dinner for two, or simply bills. So begins the sad story of mass recidivism, the return to American overconsumption enabled by those god-awful credit cards.

My hunch just a few weeks ago served me right and was verified by The Wall Street Journal this week: For the first time since the Great Recession started in 2008, banks are beginning to make many more loans to consumers.  In general, this isn’t a bad thing, but the extension of credit to consumers who haven’t quite learned the lesson of good credit management will pick up old habits and overextend their obligations.  This is likely the case with those who carry balances.  These revolvers are the target of credit card companies looking to increase profits quickly. Thus, as revolvers spend more and creditors increase loans, we could see a return to the unhealthy credit card debt levels of early 2009.

Here are a few important statistics from The Wall Street Journal article:

- Bankcard loan originations increased 17% in the third quarter of 2010 as compared to the third quarter of 2009. 

- Bank of America CEO Brian Moynihan told analysts last month that industrywide, credit-card holders who carry balances "have actually started to borrow just a little bit more: not a lot, but 3% or 5%."

- At Discover, customers who revolve their credit-card balances increased their spending in September, October and November.

Read the entire article at The Wall Street Journal


Feed You can follow this conversation by subscribing to the comment feed for this post.

This is a welcome development. Rather than banks being hostile with customers who have balances, why not offer flexible lite long term payments as a re-settlement.

The comments to this entry are closed.

Follow up on Twitter!

About Me

Greetings! I’m Kevin D. Johnson, a business owner who has recently assumed the role of consumer advocate and internet activist. Atlanta, Georgia is my home.

My Story

Upon returning from my wonderful honeymoon in Jamaica in October 2008, I received what I thought was an ordinary American Express bill, but to my surprise it was a disappointing letter informing me that my credit line was reduced by about 65% for a highly suspicious and discriminatory reason. Considering my excellent credit score and pristine payment history, it just didn’t make sense. However, what does make sense are the unfair and insidious policies that I have uncovered when asking why. It is time to change them.

Good Morning America tells my story.

The Goal

I created this web site to document and share my challenging journey to change what is wrong, unfair, and unjust in the credit card industry. The ultimate goal of this web site is to inform consumers of ways to stand up for themselves against treacherous business practices and to educate consumers about how to improve their credit. Finally, I hope to encourage a more open dialogue with credit card companies about their policies–good and bad.


I am proud to say that this blog's unyielding demand for change led to an important amendment in the final Credit CARD Act signed by President Obama on May 22, 2009. Despite this major accomplishment, there is still more work to be done.

View video of bill hearing in Maryland

Testifying at a bill hearing in Annapolis, Maryland

Speaking Engagements

In an effort to educate as many people as possible about financial management, especially about how to manage the current credit crisis, I have begun to speak around the country at colleges, universities, corporations, chamber of commerce meetings, congressional hearings, trade organization meetings, etc. Having acquired a wealth of information that will help to empower people and to improve their financial future, I feel that sharing this information is the least I can do to make a positive impact. For information on my availability for speaking opportunities, please send an e-mail to Jennifer Silverman at jennifer@silvermanworldwide.com.

Speaking at a university


All information provided on NewCreditRules.com is provided for information purposes only and does not constitute or substitute for professional financial advice. Information on NewCreditRules.com is subject to change without prior notice. Although every reasonable effort is made to present current and accurate information, NewCreditRules.com makes no guarantees of any kind. This web site may contain information that is created and maintained by a variety of sources both internal and external. These sites are unmoderated forums containing the personal opinions and other expressions of the persons who post the entries. NewCreditRules.com does not control, monitor or guarantee the information contained in these sites or information contained in links to other external web sites, and does not endorse any views expressed or products or services offered therein. In no event shall NewCreditRules.com be responsible or liable, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any such content, goods, or services available on or through any such site or resource.

Popular Posts

  1. Credit CARD Act contains amendment inspired by this campaign

  2. Bankers Vow Revenge

  3. Republicans less likely than Democrats to have too much debt?

  4. Credit card bill won't outlaw redlining

  5. Create your own data mining strategy

  6. Top 25 subprime lenders behind the mortgage meltdown

  7. President Obama’s bad idea

  8. Bank of America gets a new chairman: my good friend

  9. Should the rich pay higher interest rates?

  10. Scam alert: Avoid debt relief and credit repair firms

  11. Do you know your medFICO score?

  12. Kevin, you're "LOOKING for discrimination"

  13. Woman denied credit due to blacklisted mortgage company: Bank of America

  14. Video of Maryland bill hearing against “blacklisting”

  15. A comprehensive list of "toxic" mortgage companies

  16. Speaking engagement brings a pleasant surprise

  17. Credit card securitization encourages fee-based profit model

  18. Everything bad about the credit card industry exposed

  19. The Credit CARD Act is great, but not strong enough

  20. Companies cancel cards of responsible customers

  21. What’s your credit score, President Obama?

  22. Fair Isaac Co. will no longer sell Experian-based credit scores

  23. Why merchants suffer just as much as consumers do (Part I)

  24. Big defeat for consumers, small victory for American Express

  25. American Express says it has changed its discriminatory policy, but don't be fooled

  26. What’s your horror story? Do you have praise for a company?

  27. Beware: These stores could harm your credit! (Part II)

  28. Beware: These stores could harm your credit! (Part I)

  29. Major banks cope with shame of being on welfare

  30. What affects your credit score

Great Resources

  1. ChangeInTerms.com

  2. Complaints.com

  3. ConsumerAffairs.com

  4. Consumerist.com

  5. CreditMattersBlog.com

  6. CreditSlips.org

  7. DefendYourDollars.org

  8. Epinions.com

  9. GotaClassAction.com

  10. My3Cents.com

  11. PlanetFeedback.com

  12. RipoffReport.com
* List provided by ChangeInTerms.com.

Selected Media Coverage

Powered by Johnson Media Inc. and consumers who want to make a difference.