UK
Tightening monetary conditions hitting UK banks have resulted in a
sharp rise in the number of applications for credit cards being
rejected, reveals a study by financial product comparison company
MoneyExpert.
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In the six months to September 2007, 3.27 million people – 9
percent of all applicants – had their request for credit cards
rejected.
The rejection rate was up 17 percent compared with the six months
to March when about 2.7 million applications were rejected, said
MoneyExpert. The application rejection rate was highest for people
aged between 25 and 34 at 15 percent, and lowest for people aged
between 55 and 64 at 3 percent.
“Credit card companies have had a rough ride with bad debt so it’s
no surprise that they are becoming stricter on who they’ll lend
money to,” said MoneyExpert’s CEO, Sean Gardner. According to
MoneyExpert, more people in the UK are rejected for credit cards
than for any other financial product.
The higher rejection rate comes at a time when UK credit card users
are being hit by increases in interest rates and fees, for cash
withdrawal in particular.
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By GlobalDataAccording to another financial product comparison company,
Moneyfacts, 125 of the UK’s almost 300 card schemes increased
charges in September and October alone. The most significant number
of increases – from 69 card schemes – related to cash withdrawal
fees.
Describing the wave of increases as “quite staggering”, Esther
James, a credit card analyst with Moneyfacts, said: “It seems as if
the credit crunch is beginning to cause credit card
chaos.”
