Banks Are Handing Out Beefed-Up Credit Lines No One Asked For

Channel: Bloomberg Markets and Finance
Published: 2 hours ago

Jan.27 -- Credit card issuers have found a way to make more money from borrowers. They're raising the spending limits for many of them, even though they didn't ask. The story is in Bloomberg Businessweek.

Consumer advocates accuse banks of setting a trap. It'S called the proactive credit line, increase better known as pcl. I, some customers on the verge of maxing out their cards are getting their spending limits raised without their permission, many of the card holders getting the increases are near. Prime customers, that means they have limited or sketchy histories of paying bills. Us issuers boos ...
ed credit lines for about 4 % of cards in each quarter of 2018. That'S double the rate in the years after the financial crisis, the strategy it's paying off for banks, they generated a record 179 billion dollars from credit card interest and fees in 2019. Boosting credit limits is part of the strategy for additional growth at card issuers, including jp morgan capital, one and citigroup, but analysts call it risky business. They say that in a downturn the added debt could hurt both cardholders and the banks that issue them.

Watch Next