Poor-credit consumers may opt out of credit industry

Recent federal regulations, such as the Dodd-Frank Consumer Protections Act and the Credit Card Accountability, Responsibility and Disclosure Act, have led credit card companies to change their lending habits and find new sources of revenue. 

One significant change many card companies made was to tighten their requirements for borrowers. Card issuers praised consumers with good credit by putting out more reward offers, while reducing options for customers with poor financial histories, according to The Associated Press. With few reasonable credit options available, some poor-credit consumers may look to other products, such as a prepaid debit card, for their purchasing needs. 

Many cards on the market now come with new annual fees and increased interest rates; though, most of these offers are geared to individuals with subprime scores, the report said. Credit-healthy consumers can still obtain credit cards without these costly fees and that have zero-percent introductory rates. 

As a result of the new credit card fees and charges, many consumers may opt to bypass the credit industry altogether for other convenient financial options, like prepaid debit cards. While these products don't come with a line of credit, prepaid cards may be able to help individuals improve their money management and stay within their means. Using these tools responsibly may help consumers organize their resources to pay off more of their debt, allowing them to improve their credit standing.