In the US it appears that this may be the case. American express is offering some clients a $300 gift card to close their accounts and pay off credit card debt in the next few months (ht Marginal Revolution). This is interesting, given that a few months ago (in the middle of the explosion of the credit crisis) there still appeared to be plenty of available credit for consumers.
Will we see the same sort of deals in New Zealand? According to RBNZ figures (here) credit card limits are still growing at a reasonable clip (4.3%pa). Furthermore, we know that credit card rates have fallen – implying to me that banks/credit card companies are still willing to provide credit to consumers.
However, interest bearing debt has also risen quite sharply – as “interest bearing debt” is generally debt that is in some way overdue this way be a concern. In the US it was concern about overdue payments that has lead to a pull back in credit card availability – implying that there is scope for it to happen here.
Personally, I think a sharp decline in peoples willingness to use credit cards will be the primary factor behind growth in credit debt going forward – as a result, I would expect the interest rate on credit cards to fall further as well. I don’t think we will have to worry about credit card companies trying to restrict lending amounts …