Lenders abruptly cut lines of credit

Lenders abruptly cut lines of credit

www.boston.com

Banks and other lenders nationwide, seeking to reduce their debt exposure, are shutting off and limiting consumer credit card lines, even for many customers who carry low balances and pay on time.

As much as $2 trillion in consumer credit - nearly half of what is available - could be rescinded, according to an estimate by a prominent banking analyst.

(visit the link for the full news article)

Well, I knew this was coming - but it also outrages me, that the banks and credit companies are getting billions from the govt, but they are cutting off the credit to the people!

Most bankers won't offer details about the cutbacks, but acknowledge they are happening. Betty Reiss, a spokeswoman for Bank of America Corp., the nation's second-largest card issuer, said, "We're taking a more aggressive look at accounts in order to control risk in the current environment." The bank is one of the biggest recipients of federal bailout funds - $45 billion.

Meredith Whitney, the Oppenheimer & Co. banking analyst who in November predicted a $2 trillion drop in credit availability, has said the loss will hurt the economy because consumers rely on credit cards for regular spending.

I have been waiting for this and everytime I have used my credit card, I have held my breath about it going through.

Not for the reasons of my having "bad credit" but because I have a large credit avalibility and have figured - all cards and credit will be shortened for everyone..

Tom McNiff, a retiree in Winthrop, said he received a letter Jan. 7 informing him the credit line on his Eastern Bank card was being reduced from $12,000 to $2,700 "to reflect your spending." The letter was sent on behalf of Barclay Card US, the company that owns his account.

Kevin Sullivan, a Barclay spokesman, said, "We think we have a [credit] policy that's appropriate for this economic environment."

McNiff said he rarely carries a card balance, unless he makes a large purchase, and even then he typically pays the balance within two months. He said the letter troubled him because he had a hunch it would hurt his credit rating. After McNiff called to complain and the Globe made inquiries about his situation, the company reinstated his $12,000 credit line.

People will need to start having cash on them for purchases in the not too distant future.

I have one BIG Friggin question though......................
What the (bad word) are the banks and credit companies doing with those billions of dollars that we will have to pay for - for generations to come?

So..... citibank, American Express (formed a bank - just to get billions from bailout) they have just gotten loaded up with billions,

if I remember correctly was suppose to be actually "For the People" - for getting loans and jobs being created, to keep credit flowing........
somebody, please tell me what I am missing out of all this, and what I don't understand.......

because I haven't seen all this "credit nor job creations" from the bailout!

I am now seeing even MORE credit being taken away from the people -

Leslie McFadden, a writer for Bankrate.com, a consumer banking and finance website, said banks are targeting people with inactive accounts as well as those with large balances. "You can't prevent your credit card issuer from lowering your limit," she said. "The advice is to pay on time and keep your balances low."

I have not had my card denied anywhere yet, but I still hold my breath, each time I use it. I know the day will come.... I will be standing there, when the person says "sorry" it won't go through".








www.boston.com
(visit the link for the full news article)

The suspicious part of the whole thing is why are you demanding more credit?

You don't want credit. Credit creates debt. Debt fuels fiat currencies. Fiat currencies enslave nations.

This is Problem-Reaction-Solution and your post indicates you've fallen for it.

Let them cut off lines of credit. Force credit-addicted businesses and consumers to go under. New, fully funded businesses and consumers with proper financial perspective will rise to take their place.

Sure it will be painful, but freeing yourself from slavery always is.

[edit on 31-1-2009 by cogburn]

If we did a thread on how much credit has changed in the last year I am sure it would be an eye opener.
From the credit card companies to countries credit ratings dropping,then I am sure people will start to see that times are going to get tough sometime in the near future.
Star and Flag yet again.

reply to post by questioningall

if I remember correctly was suppose to be actually "For the People" - for getting loans and jobs being created, to keep credit flowing........
somebody, please tell me what I am missing out of all this, and what I don't understand.......

It was never "For the People". It never was and I don't think it will be until everything changes. There should be riots for this.


The government makes a mistake and we have to pay for it, just like how old people create wars and the young ones have to fight it.

Yep, it happen to me. I used my card yesterday, and they stopped it. I was lucky and had some cash on me to pay for it. This is BS. As one poster said, they get billions from the Fed that we will have to pay for, yet, they cut us off when it comes to credit. Yes, that makes me want to go get a loan to by things...........riiiiiight. I say to hell with them all. They can throw me in jail, i`m done paying taxes for all those crooks in Washington and the banks.

Yeah, if I were banks and other lenders, I too would stop (ahem) lending, especially when the debtors defraud or fail to pay back the loans. That's just common sense. Why would banks and other lenders dig themselves into a deeper hole with people who are already in a big hole themselves due lack of work, which means less taxes paid to the government and less spending other than on essentials, like food, clothing and mortgages?

What do you think they are doing with those billions? NOTHING!

That's exactly what they got them for. Ask yourself, how do banks make money? Answer: by lending money. No money being lent = no income for the banks. Ideally, in a truly capitalist system, this one thing would force the banks to loan money out at cheaper rates, in order to make enough money to pay their overhead and stay in business.

But no, that isn't the way it works now. Now, we give the banks taxpayer money so they don't have to loan money out, with the stated reason that they need it in order to loan more money out. It's like me if I take time off between jobs: I can stay home and work privately until money runs out, then I have to go back to work. Should someone give me money because I didn't have any, I would stay home longer before going back to work.

The banks do not want to loan money! That was never the reason they asked for the bailout. They asked for the bailout so they wouldn't have to loan money in a rough economy. So why is it such a surprise that there is still no credit?

Will humanity ever learn to comprehend itself?

TheRedneck

And they are going to do what with the money they got from the Fed? Hold on to it? So, in other words, the money that was to help move the economy is going to just set there. And what of those who are in need? They are to just go away then right? They don`t exist then. I say forgive all current debts and start over, and not let people get carried away with to much credit, by putting a cap on how much one can get and not go over that amount.

reply to post by questioningall


I am speculating, but I believe

the (bad word) you so elegantly avoided is allowed to be displayed.

ready? the bad word is:

DERIVATIVES

reply to post by TheRedneck


But, you see this way, they don`t need to give loans now. They got the money they want from the Fed., they don`t need us as long as they get what they want one way or the other.

The worse the economy gets, the more this may happen. If you have a credit card with a 10,000 limit (just an example), you lose your job and are unable to make basic payments on your mortgage/lights/water etc. because of unemployment being to low or running out...what will you use?

Credit cards.

You won't be able to pay back if you are unable to get a job quickly. The debt on the banks will continue to rise. The bubble will continue to get larger.

People will start maxing them out...if they haven't already.

Is this the only reason for all of this happening? No. But i'm sure it has a part to play.

Originally posted by pikypiky
Yeah, if I were banks and other lenders, I too would stop (ahem) lending, especially when the debtors defraud or fail to pay back the loans. That's just common sense. Why would banks and other lenders dig themselves into a deeper hole with people who are already in a big hole themselves due lack of work, which means less taxes paid to the government and less spending other than on essentials, like food, clothing and mortgages?

Really? then the banks that went to Paulson and said....."Jeez, we need $100000000000 of money, so we can continue helping all the American people - but don't mind our lending practices where we were actually screwing the people before and then foreclosed on them....

Also the way we cooked our books, we are writing down all the loans that we have in house, even though the people are still paying on time and have not defaulted, but we are going to tell you we have lost billions against those loans, due to the value of the house prices dropping - so we can take those write downs - BUT the people are still liable for those full value price loans, and we won't let the people write down the loan to what we now have it valued at.

Now, we have our billions, with the promises of keeping credit moving and giving out loans, but instead - we think we will just keep the money - and (same bad word - as in orginal posting) the people!

Originally posted by imd12c4funn
reply to post by questioningall

 

I am speculating, but I believe

the (bad word) you so elegantly avoided is allowed to be displayed.

ready? the bad word is:

DERIVATIVES

LOL yeah that was the word... I meant.....
Ferivatives

reply to post by FiatLux

Exactly my point.

I'm still proud to say BOTH of my US Senators voted against that mess...

TheRedneck

Originally posted by FiatLux
Yep, it happen to me. I used my card yesterday, and they stopped it. I was lucky and had some cash on me to pay for it. This is BS. As one poster said, they get billions from the Fed that we will have to pay for, yet, they cut us off when it comes to credit. Yes, that makes me want to go get a loan to by things...........riiiiiight. I say to hell with them all. They can throw me in jail, i`m done paying taxes for all those crooks in Washington and the banks.

Did you call the card company about the denial of credit?
What did they tell you was the reason for now allowing your card to be processed?

I am very interested in knowing.

Anybody else's card not being accepted now?

I only have a 500USD visa for emergencies so I haven't been affected ...yet. But a question, if say you have a card that has a line of 5K and you have 3K on it and all of a sudden they cut it to 2.5K or 1K do they charge you the over-the-limit fee and such? That would be interesting to know.

reply to post by djvexd

They can't legally lower your credit balance below your current principal level.Lowering your limit below your balance just to draw overlimit fees would be considered usury.

Yes, I did call them. I asked them why I was cut off, and the rep told me that this was being done because they have had card holders who were maxing out the cards and not getting payments into them. I told her so this is how you handle the problem is to cut everyone off? She said it had to be done before it got to far out of hand. I told her I was cutting up my card and to drop my account as soon as it was paid off. I`ll just pay cash from now on when I go shopping. I did call a friend of mine who has the same card and told them about it. They went to an ATM yesterday to get some cash, and it turned them down. Looks like a fun time ahead for the country when it comes to credit now.

When it comes to survival - (and we are coming to that)
people will use their credit cards with no immediate concern of paying it back -
to eat - pay rent - medical - etc.
Upper class, Middle class, lower class - good credit - bad credit - it's all the same.
We will do what we have to - to survive and feed our kids and keep our electric on.
The credit card companies know this.