Credit Card Companies Cutting Card Balances...

[Lee]

So was just talking to mom and she told me that her CC company has just reduced the amount of credit on her card that she has had since the 80's.

She never keeps a 'balance' on the card and it gets paid off in full whenever she uses it, no matter how much she has used it.

Do you think with the credit card companies doing this type of stuff people are going to be more cautious about using their cards to spend on memberships to porn sites?

I can totally understand why the CC companies would want to do this, it limits their exposure to people not paying off the balances they run up, but at the same time, if you have a zero balance and your credit line gets cut in half, is this going to help or hinder the individual and the economy along with the adult industry?

Regards,

Lee

[nickbaer]

This new credit line cutting practice by CC companies has been in the news for about a month now.

What is particularly evil about it is that one part of the FICO score is based on the amount of one's credit lines vs the amount they have actually used.

Therefore as the CC companies cut credit lines, they lower the customer's FICO score, thus setting them up for a higher interest rate. Very evil plot to harm consumers.

We're heading into the cold weather months, VOD minutes are up, membership sales are up. It could be that consumers are spending on what is going to make them happy and feel good, in the current economy, not on more baggage that they will throw away or give away in the next round of housecleaning.

What's more important: some crap at WalMart, that you have to stand in line for 15 minutes to buy from some toothless checkout person who still jerks and twitches, or a month of a membership site?

I think the real measure of consumer buying habits will be in the Spring when the customers' cycles moves them back outdoors.

[longboardjim]

I don't keep any balances on my cards and found it amusing the smaller cards good for 4 and 6 thousand were reduced to $700.00 and $900.00 , I guess that could still get me a room and a rent a car. ( interpreted: single occupancy best western and ted's rent-a-wreck! )
I guess it's time for me to start carrying cash again.

jim

[Lee]

I don't keep any balances on my cards and found it amusing the smaller cards good for 4 and 6 thousand were reduced to $700.00 and $900.00 , I guess that could still get me a room and a rent a car. ( interpreted: single occupancy best western and ted's rent-a-wreck! )
I guess it's time for me to start carrying cash again.

jim

Mom basically uses her for 'emergency' purposes and that is it, one card she has had since the 80's as i said and the balance got cut down from almost 25k to a little under 8k.

Its not so bad for her because she doesnt do much CC spending but i couldnt imagine someone who relied heavily on their credit cards losing over 50% of their credit line, that would put them in significant financial difficulty i would imagine.

Regards,

Lee

[longboardjim]

Mom basically uses her for 'emergency' purposes and that is it, one card she has had since the 80's as i said and the balance got cut down from almost 25k to a little under 8k.

Its not so bad for her because she doesnt do much CC spending but i couldnt imagine someone who relied heavily on their credit cards losing over 50% of their credit line, that would put them in significant financial difficulty i would imagine.

Regards,

Lee

I guess what I couldn't understand is I use my cards regularly and when the bill comes in I completely pay it off , I liked using my lesser cards because in the event I misplaced one of them someone couldn't take it for a ride like one of my higher cards.
I cannot get too mad because unfortunately this is a credit card world and you can't get very far without one. ( interpreted: hilton does not accept cash up front for a room. )

jim

[maxx68]

Lowes cut my Mom's balance cause she hadn't used her card in three months. She was a little po'd when she went to trade in her camery for a scion and I had to get the car in my name. What's the big deal...she has a husband who earns over $100,000 a year and I am on disability with a $645@month income, just so happens that my FICA was in the 700's.

This also shows that banks don't look at income just the stupid FICA scores.

[nickbaer]

FICO is a fraud scheme to justify higher interest rates.

I haven't had - or needed - a credit card since 2001 or so.

Visa/MC cards linked to my bank accounts do me fine.

I guess there's no way for us to know if the Visa/MC used by our customers is a real credit card, or a bank account card.

[gaybucks_chip]

From what I've been reading, credit-card backed securities are going to be the upcoming wave that kills even more banks.

Apparently big card issuers have, for a couple years, been packaging credit card debt from a bunch of consumers and selling it off in the same way the mortgage banks were doing with mortgages. Only now, the credit cards are starting to experience defaults in the same way that mortgages were a few years back.

My understanding is that, in part, the reduction of credit lines is an attempt to stabilize the credit backing the securities... but from what I've read, it's basically an attempt to close the barn door after the cow has left; most of the people that are or will have problems are people that have leveraged all of their credit lines to the hilt.

The whole situation is fucked. Fair Isaac will end up having to re-structure the FICO score or no one will be able to get credit, which will continue to degrade the economy. Either that, or we will have a gigantic shift back to an all-cash economy, which would also have enormous problems.

[Squirt]

I dont' know what the CC companies are thinking, they are still as messed up as ever.

My friend is married with 4 kids, they make $35k a year and have about $30k in CC debt. She went to Target, at the register they asked her if she'd like to apply for a card with them, she said yes, did so and answered the questions honestly, and was promptly given $12,000 in credit at Target on the spot!

go figure

[Northstar]

My partner and I have both received letters in the mail from a couple of our CC companies saying they were lowering the credit on a couple cards we haven't used in years. We both have very good credit and $0 monthly CC balance but I guess they are doing this to everyone.

[B2BwithJoeD]

What is particularly evil about it is that one part of the FICO score is based on the amount of one's credit lines vs the amount they have actually used.

I think the real measure of consumer buying habits will be in the Spring when the customers' cycles moves them back outdoors.

From what I've been reading, credit-card backed securities are going to be the upcoming wave that kills even more banks.

Apparently big card issuers have, for a couple years, been packaging credit card debt from a bunch of consumers and selling it off in the same way the mortgage banks were doing with mortgages. Only now, the credit cards are starting to experience defaults in the same way that mortgages were a few years back.

Some really good posts here, you guys are paying attention - other issues for the industry are the effects of lowered rates on balances and interference with recurring, higher card interest rates encouraging holders to more closely scrutinize their monthly bills...

[HunkyLuke]

this is starting to show up as failed rebills