Posted on 12/13/2008 9:41:29 AM PST by RKBA Democrat
If you haven't yet had your credit limit slashed on one of your credit cards, it's highly likely you will -- if Meredith Whitney is right, that is. Whitney, an analyst and managing director at Oppenheimer & Co. who predicted the current financial-services industry meltdown, now says credit-card issuers will eliminate more than $2 trillion in available credit over the next 18 months.
Already, lenders have cut back on available credit due to their heightened aversion to risk and difficulty in funding loans. Before the financial crisis, consumer loans could be sold on a secondary market and the proceeds could help to spur more lending, but that market has largely dried up.
(Excerpt) Read more at marketwatch.com ...
The best part is that the credit card companies are essentially cutting off their own noses to spite their faces in the long run.
I'd add one piece of advice to the notsohotso list at the end of the article: consider cutting up some or all of your credit cards and using a check card instead.
Is this really true? I have 3 credit cards, of which 1 has a significant balance. However, on the other card, which I pay in full every month, the credit limit went from $6000 to $6600.
Earlier this fall, I received a notice that my credit limit had been reduced by a few hundred dollars. I called and asked why, and the bank couldn’t explain.
I then called them back and requested a credit increase. By the end of that day, they increased my credit limit by more than I had requested.
The total credit limit increase they gave me was 50% more than my previous credit limit before they tried to decrease it.
FWIW.
One can extend credit via a plastic card??
I'll have to try it some day and see what happens. ; )
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Lost me at the “one of your credit cards” part. I can’t remember the last time we were near the limit on our one card, but it goes up every year or two. And the bank that has our credit card offerred to refinance our house just last week, when I called with a question.
“.....consider cutting up some or all of your credit cards and using a check card instead....”
....or better yet pay cash....if you don’t have cash, start a savings account until you do...being in debt used to be a bad thing....we need to get back to that way of thinking.
If credit were sugar, the American economy would be diabetic. It is time for this country to go on a credit diet. One way you do this is to tax interest payments and to give tax deduction to savings income. Also, we need to lower capital gains taxes.
This would work. We wouldn’t need bailouts and GOSPLAN.
I have one credit card, which I pay off in full every month. If the limit went down, I won’t cry over it, that’s for sure.
Personally I think the reason the limits are being reduced is so people can hit their credit limits easier and pay more money in over-the-limit fees.
“Is this really true?”
Depends on the issuer. I suspect that the large credit card issuers will be the ones to cut credit lines first. Of course that in turn reduces FICO scores, which allows the credit card companies to jack up interest rates.
The large credit card companies really are utter scuzzballs. But I digress...
Of course getting out of debt is usually the best strategy. In the mean time, you might want to look into getting your credit card through a good credit union and cutting up the rest. They’re less likely to cut you off at the knees by jacking up the rate or cutting your credit limit with little notice.
I’ve had two cards with zero balances close out from under me.
That only works on those who carry and build up a balance. For those of us who pay it off every month, that's not an issue.
“The least I can do is to honor your high tone and wish you the worst in life. So I do.”
Why thank you! And I’m sure the credit card companies thank you as well for being their (presumably unpaid) advocate.
A generation ago, individuals who engaged in the practices that many credit card companies engage in today were called loan sharks, and faced prosecution under usury laws.
What a difference 30 years makes.
That really irritates me. While I understand the math behind this reasoning, I still think it is wrong to label someone as being an irresponsible borrower because they borrow within their means.
“I have one credit card, which I pay off in full every month. If the limit went down, I won’t cry over it, that’s for sure.”
You’re not the norm.
I think it honestly depends upon where you are, geographically. These tales of pulled HELOC and reduced credit lines are not inaccurate, they’re just coming from areas of the former real estate bubble. We never experienced that here in NC, well, maybe on the coast and around recreational lakes, but the vast majority of homeowners haven’t been hugely impacted. Not yet, anyway, if ever. Prices have softened and begun to fall back, but houses in my neighborhood are for sale or have sold for a price that is similar to last year. They’re just selling very slowly, up to six months on the market. We haven’t had a foreclosure nearby in many years, though.
I’ve had a rough time this year, myself. Gone from an excellent income, to no income, to mediocre income that is just enough to pay the bills. Kept everything current and still have good emergency savings, though. No reduction to my available credit, and no absence of offers to refinance.
Rates are very attractive right now, if you’re looking at all, by the way. Got an offer of 4.75% for a fifteen year refi, 5.25% on 30. If it falls below 5 on 30, I might just go for it, to cut my overhead.
Or throw them over the limit knowing there are scarce extra resources to pay it down immediately. If these companies were run by people with souls, they would give 3-4 months notice so people could adjust. Not everyone who has CC debt is a bad financial manager; things can happen to lay even the most prepared low for a while.
I’ve had two credit cards cancelled for “non use”. It’s okay with me. I wasn’t going to use them anyway.
“I’ve had two cards with zero balances close out from under me.”
And in so doing, they also probably lowered your FICO score, which will raise your cost of credit in the future.
Nice of them, huh?
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