As if we needed more proof that the credit crunch has left a lasting impact upon the UK finance market, the news that between 40% and 50% of all new credit card applications are being rejected is evidence enough.  It seems that the banks and finance companies are running scared, and perhaps taking a more balanced view of potential future problem accounts.  So what is really happening?

We are looking at a two tier effect with credit lines a little harder to come by and finance companies wary of taking on potential problem accounts as the economy looks to take a down turn.  While this situation will not last forever, there will be many observers in the Bank of England pleased to see finance companies taking a more sensible approach to credit.  So will this move effect consumer spending?

Whether or not consumer spending is materially affected in the short term is debatable with Christmas on the way, but it may well open the eyes of many consumers who possibly depend on moving from card to card.  Unable to effectively refinance their credit card debts, many may well need to pull in their belts in the New Year with a rise in debt problems expected.

 If ever the consumer was looking for a sign that credit may have got out of hand for some, now is it.  Whether the consumer will take any real action to alleviate the problem is another matter – we shall see.