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Credit limits fall, prompting cash, check payments

While people may have relied on credit cards to make large purchases in the past, this trend appears to be ceding ground it had previously gained, making it critical for merchants to invest in a cash and check scanner to manage transactions as efficiently as possible.

The recession and shaky recovery made it less than ideal for many Americans to continue using their credit cards as they once did. While some people were unable to pay their monthly bills and lower their balance, thanks to lost jobs or pay cuts, others didn't want to risk paying interest or realized they managed their budgets better when they paid in cash. However, there's another factor playing into the lower rate of credit card use - smaller credit limits.

Credit limits drop, consumers react
In recent years, many lenders have taken the opportunity to lower cardholder spending limits, and some consumers have noticed a significant difference in the amount they are able to put on their cards each month. Even consumers with high credit scores or those who have had their cards for years are not immune to this trend, and more people are noticing they're given a lower line of credit than they were when the economy was doing well.

When credit limits drop substantially, some individuals may have difficulty making large or unexpected purchases, particularly if their limit fell by several thousand dollars or the drop was completely unexpected. Because more Americans are experiencing falling credit limits and are unable to make purchases as a result, they may increasingly rely on more traditional payment methods, like cash and checks. Because currency and check transactions have no limits, consumers making a large purchase that exceeds their credit limit may find these payment options are more flexible and provide them the opportunity to still obtain the goods they want or need. Similarly, those who have encountered an emergency expense and are unable to fit a purchase into their monthly spending limit without being denied or obtaining an extra fee may find cash or checks offer a viable alternative.

As such, retailers across the country must be prepared to handle consumer purchases that can't be made with a credit card. By obtaining money counters and the latest check scanner, businesses can serve patrons who may have experienced a drop in spending limits and be unable to complete a credit card transaction.

August 1, 2013