Credit-card companies had no trouble ratcheting up credit limits and access to cash for consumers in the pre-credit-crunch days. The easy-money policy hasn’t come home to roost on the card issuers the way it has on mortgage lenders – not yet, anyway.
But credit-card companies aren’t sitting around and waiting for that shoe to drop. They have been busy raising interest rates and fees, and now appear poised to start hacking down the stratospheric credit limits they have granted. As much of $2 trillion in extended credit lines could be reeled in, one analysis suggests.
For the majority of credit-card users, that probably won’t be a problem. A lot of us have big credit lines that we didn’t ask for and never touch, and so taking them away won’t have much effect on our finances. But for a good number of folks the hit to credit limits could be a major financial setback, especially as job losses mount and consumers face credit crunches of their own.
The only potential bright spot in all of this is that the lack of sympathy being extended us by the card companies is coming round on them as federal regulators get set to impose stricter rules on abusive card practices. There is a Scroogian lesson in there somewhere.
D.C.