Banks Putting Squeeze On Credit Card Holders
Recent tightening of the credit markets has caused banks to start putting the
squeeze on credit card holders. In an attempt to limit defaults by credit card holders
credit limits are being dramatically reduced. It does not matter that you are and have
been paying your bills on time. Banks have indicated that they will be lowering credit
limits and changing terms based on economic changes and conditions. Any generalized
perceivedrisk can lower your limits.
Why is this a problem? Because a sudden lowering of credit limits will effect your
credit score in a negative manner. It's the debt to available credit ratio that will be
effected. Additionally, because the drop in credit limits is so drastic, for example,
what was once a $5,000.00 limit with a balance of 500.00, is being lowered to $550.00.
And, as you pay it down and lower the balance, you will be subject to additional lowering
on a whim, or just a perceived risk.
The other problem with this, is, if you are not careful, and do not notice the change,
you may use the card and force yourself unknowingly into an overlimit charge, and get
additional fees added on. Most assuredly, instead of being more willing to work with
consumers, once again, and true to form, the banks are finding more creative ways to
both collect more fees and protect themselves from taking a hit. Additionally, if you go
over the limit, you will be facing considerably higher interest rates on what little available
credit you have left. The banks will be merciless in enforcing these rip off fees. Yes, credit card companies do have to inform you that they are lowering your credit limit, just make sure you read
all your mail.
How about that emergency card you keep active and open but never use,
because you have it reserved for emergencies. If it is truly inactive, do not be
surprised when the bank cancels it. It costs them money to have it inactive.
In addition, those pre-approved offers you get in the mail, will be seeing a dramatic decline.
Introductory offers at 0%, will be much harder to find, and if you have sub-par credit you will
find it difficult to find a card at a predatory rate. So far, Chase and Discover still have a few
deals.
Information source for this story was: http://www.cbsnews.com/stories/2008/10/14/earlyshow/living/money/main4519914.shtml?source=mostpop_story
Steven Ciantro
Member National Association of Credit Counselors
American debt Enders
Help@americandebtenders.com
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