18 Thousand Applications Denied Credit on a Daily Basis

Ever wonder how many people are getting declined when applying for a credit card?

Well, a new report issued by UK-based MoneyExpert.com found that roughly 18,000 applications are rejected by credit card issuers on a daily basis.

That’s 3.24 million rejections over a period of 180 days if you’re counting.

Their research figures revealed that about one out of every 14 people, or 7 percent of adults, have been rejected from a credit card issuer in the past six months.

Young adults are apparently the worst off, with 10 percent of those aged between 25 and 34 denied in the past six months.

Conversely, only three percent of people aged between 55 and 64 were denied during the same period, as they are assumed to be the lowest risk category.

The company noted that the enduring credit crunch has forced banks and lenders to step up their guidelines, leading to a higher rate of denial.

Of course this is a study of British consumers, and it’s unclear if United States standards are higher or lower than theirs.

Either way, it’s clear that a large number of consumers in need of credit are being denied, which could lead to a larger number of defaults on existing credit cards.

Federal Reserve to Propose New Credit Card Rules

The Federal Reserve is reportedly putting together its own rules to tackle unfair and misleading credit card practices, according to the Washington Post.

Per the article, things like arbitrary interest-rate increases and two-cycle billing are on the agenda.

Discover is currently the number one purveyor of the two-cycle billing method, which can lead to significantly higher finance charges.

The new rules would also force credit card issuers to better disclose terms and conditions to cardholders, ideally not buried in the small print.

In recent months, some credit card issuers have eliminated universal default, but at the same time, raised the cost of late fees and balance transfer fees.

But things like negative payment hierarchy, the practice of paying off the lowest APR charges followed by the highest interest charges, should be addressed as well.

Credit card issuers have long been scrutinized for their seemingly unfair practices, including the latest move by many to fix interest rates as rates continue to fall.

It seems card issuers are constantly devising ways to trap unknowing borrowers, and hopefully the move by the Fed will address some of those issues.

As expected, several card issuers have already warned that new restrictions could hurt all borrowers by raising associated costs and interest rates.

Only time will tell if any meaningful changes come about from all the proposed legislation.