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Is the credit card industry changing forever?

Today's announcement that Royal Bank of Scotland will be restricting credit card applications to existing customers is a further blow to UK consumers. This follows hot on the heels of a similar strategy announced by HSBC earlier this year and many in the industry fully expect other credit card companies to follow suit. So is the UK credit card industry changing forever?

It would appear to be a mixture of risk assessment and the necessity to grab as many customers as possible which has forced Royal Bank of Scotland to issue such a statement. However, as we mentioned in one of our earlier post, even those who are willing to change banks so that they may apply for a Royal Bank of Scotland credit card could be restricted from doing so if they are in debt or have existing loans with their existing bank.

Whether this will remain a long-term situation remains to be seen but there are concerns that UK credit card companies and UK banks are pulling in their horns and pulling in their credit lines. The more restrictive credit lines become the more difficult it will be for UK consumers to refinance their existing debts and get themselves back on their feet. However, consumer demand may well see credit card companies reverse this strategy in the future.

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