October 5, 2009

Two British banks limit credit cards

Two of Britain's largest banks said they would limit new credit cards to existing customers only, a clear indication that credit is on a short leash.

RBS along with is sister brand NatWest, and HSBC, Britain's largest bank, said new cards would only be issues exclusively to their established customers.

This move minimizes the risk for banks but at the same time it also limits consumer choice, said uSwitch.com financial expert Louise Bond, The Daily Mail reported Monday.

Bond said it was likely other banks would follow suit, meaning tighter credit and more questions about what banks have done with the billions of dollars of government funds that were given to banks to keep credit flowing.

RBS, 70 percent owned by the government, said it would off cards to customers who first opened an account, then passed the bank's screening process.

A bank spokesman said, we are focusing ... on helping our current account customers, savers and mortgage borrowers and this move helps us improve the service we can provide to them.

'We are very much open for business and welcome new customers who want a current account and a market leading credit card from us," the spokesman said.