Hooyah, $2T in credit card credit lines to be pulled back.

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No Lifer
Sep 29, 2000
70,150
5
0
Link
"In other words, we expect available consumer liquidity in the form of credit-card lines to decline by 45 percent."

We already know that Citi, for one, has been tightening the reigns a great deal. I saw my APR inexplicably almost double on a card I've never carried any real balance on and I have wicked credit. We should all realize by now that if one carries a balance with a lender, that balance can at any time be jacked up to whatever the heck they want if you so much as let off a bad fart. I do think that if you're current and never miss a payment they have to allow you to keep your rate where it is until the card expires (at which point you'll have to close it)--at least that's what Citi offered me, but I don't know if this is because they're "nice" or legally have to, and for many people it's not like they can pay it off or move to another low rate card anyway, so the hens are coming home to roost on those people.

In any case, credit card debt has gone up considerably in the past year or two. A lot more consumers will be squeezed as their lines are pulled down to their current balance or taken away entirely.
 

Farang

Lifer
Jul 7, 2003
10,914
3
0
Bad news for me.. I'm landing in New Zealand with a few hundred dollars in my pocket and was kind of relying on my credit as a safety net. Homelessness FTL
 

Slew Foot

Lifer
Sep 22, 2005
12,381
96
86
this is probably a good thing. it will keep stupid people from spending money they dont have and needing me to bail them out laer.
 

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No Lifer
Sep 29, 2000
70,150
5
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Originally posted by: Farang
Bad news for me.. I'm landing in New Zealand with a few hundred dollars in my pocket and was kind of relying on my credit as a safety net. Homelessness FTL
I still put 95% of discretionary spending on my primary card but in the next couple of months will transition off that. I think the idea of using it for points is a psychological scam and I know that using money I've not even earned/is not in my account does, even on a subconscious level, make me more willing to part with it. I like the convenience of plastic/never hitting an overdraft with an account/never worrying about somebody looting my account, but if we're being completely honest the idea that so many people for their household budgets have a line of credit that they're continually tapping is a fvcking disgrace! I want to stop being a part of that group :)

 

Descartes

Lifer
Oct 10, 1999
13,968
2
0
I also got a notice of about a 5% APR increase on a card I use all the time for business purposes. Until everyone else follows suit, I will no longer be using that card.

I'd like to know how this is going to affect a lot of small businesses that rely on this credit for inventory, shipping or even payroll.

 

DealMonkey

Lifer
Nov 25, 2001
13,136
1
0
Leave it to credit card companies and banks (who still won't lend despite billions going on trillions of dollars of cash infusions) to exacerbate an already miserable situation.

:thumbsdown:
 

TheSlamma

Diamond Member
Sep 6, 2005
7,625
5
81
Originally posted by: Slew Foot
this is probably a good thing. it will keep stupid people from spending money they dont have and needing me to bail them out later.
:thumbsup:
 

StageLeft

No Lifer
Sep 29, 2000
70,150
5
0
Originally posted by: DealMonkey
Leave it to credit card companies and banks (who still won't lend despite billions going on trillions of dollars of cash infusions) to exacerbate an already miserable situation.

:thumbsdown:
Well, they are square in the middle of it and trying to stop the bleeding to their bottom lines.

 

TallBill

Lifer
Apr 29, 2001
46,044
62
91
I have a USAA card. Still at 7.4% and no other changes. Card is good till 2012.
 

DealMonkey

Lifer
Nov 25, 2001
13,136
1
0
Originally posted by: Skoorb
Originally posted by: DealMonkey
Leave it to credit card companies and banks (who still won't lend despite billions going on trillions of dollars of cash infusions) to exacerbate an already miserable situation.

:thumbsdown:
Well, they are square in the middle of it and trying to stop the bleeding to their bottom lines.
And leave it to the credit card companies to think that raising interest rates and fees on good customers will somehow help them. It won't, it'll simply cause more defaults.
 

dullard

Elite Member
May 21, 2001
24,998
3,327
126
Originally posted by: DealMonkey
And leave it to the credit card companies to think that raising interest rates and fees on good customers will somehow help them. It won't, it'll simply cause more defaults.
Um, their good customers don't pay interest or fees. About half of people very rarely or never pay those.

The interest is there just to offset the losses from people who don't pay and to pay for investors to take the debt. Credit cards rarely make any money from interest. They instead make their money from fees (fees charged to the stores for the service and fees to the card holders).

 

StageLeft

No Lifer
Sep 29, 2000
70,150
5
0
Originally posted by: DealMonkey
Originally posted by: Skoorb
Originally posted by: DealMonkey
Leave it to credit card companies and banks (who still won't lend despite billions going on trillions of dollars of cash infusions) to exacerbate an already miserable situation.

:thumbsdown:
Well, they are square in the middle of it and trying to stop the bleeding to their bottom lines.
And leave it to the credit card companies to think that raising interest rates and fees on good customers will somehow help them. It won't, it'll simply cause more defaults.
Tragedy of the Commons says people do what's best for them even if by them all doing what's best for them the whole suffers and, by extension, so too do they.

 

DealMonkey

Lifer
Nov 25, 2001
13,136
1
0
Originally posted by: dullard
Originally posted by: DealMonkey
And leave it to the credit card companies to think that raising interest rates and fees on good customers will somehow help them. It won't, it'll simply cause more defaults.
Um, their good customers don't pay interest or fees. About half of people very rarely or never pay those.

The interest is there just to offset the losses from people who don't pay and to pay for investors to take the debt. Credit cards rarely make any money from interest. They instead make their money from fees (fees charged to the stores for the service and fees to the card holders).
Your thinking is backwards.

The "good customers," from the perspective of the CC companies, are the ones who maintain a high revolving-balance, are frequently late, or over their limit and who are being charged a high interest rate (sometimes close to 30% APR).

The "bad customers," again from the perspective of the CC companies, are the ones who pay off their balance each month, are set at a relatively low APR (7%-9%) are never late and never over their limit.
 

Deeko

Lifer
Jun 16, 2000
30,215
11
81
Yes, I got a letter that the interest rate on my citi student card will be increasing from 14% to 19.9%. Not that it matters....I don't use that card anymore anyway. I have a "real" card now with much better interest and rewards from Chase...
 

First

Lifer
Jun 3, 2002
10,518
271
136
If you have never missed a payment in your life and have made 40K+ in your life before (even if not for a full year), it's really not hard to get a $20,000 line of credit from a lot of CC companies. Hell, you don't even need to be employed necessarily. The finance charges almost don't even matter, they only charge you interest on the daily average of the balance you carry month-to-month. You could have be $2K in debt and be paying just $13 a month in additional finance charges at prime + 14.99% APR.
 

JS80

Lifer
Oct 24, 2005
26,271
7
81
Originally posted by: Skoorb
Link
"In other words, we expect available consumer liquidity in the form of credit-card lines to decline by 45 percent."

We already know that Citi, for one, has been tightening the reigns a great deal. I saw my APR inexplicably almost double on a card I've never carried any real balance on and I have wicked credit. We should all realize by now that if one carries a balance with a lender, that balance can at any time be jacked up to whatever the heck they want if you so much as let off a bad fart. I do think that if you're current and never miss a payment they have to allow you to keep your rate where it is until the card expires (at which point you'll have to close it)--at least that's what Citi offered me, but I don't know if this is because they're "nice" or legally have to, and for many people it's not like they can pay it off or move to another low rate card anyway, so the hens are coming home to roost on those people.

In any case, credit card debt has gone up considerably in the past year or two. A lot more consumers will be squeezed as their lines are pulled down to their current balance or taken away entirely.

Whoa you too? I got a letter from Citi a couple weeks ago saying they were raising my APR from 9.99% to like 29% and I had $0 balance on it for a couple months (with 700+ credit).
 

nageov3t

Lifer
Feb 18, 2004
42,816
83
91
still at 8.8% with chase... maybe they're glad that I'm going to be carrying a ~$3K balance till January.
 

dullard

Elite Member
May 21, 2001
24,998
3,327
126
Originally posted by: DealMonkey
Your thinking is backwards.

The "good customers," from the perspective of the CC companies, are the ones who maintain a high revolving-balance, are frequently late, or over their limit and who are being charged a high interest rate (sometimes close to 30% APR).

The "bad customers," again from the perspective of the CC companies, are the ones who pay off their balance each month, are set at a relatively low APR (7%-9%) are never late and never over their limit.
Financial statements from credit card companies agree with me and disagree with you. The interest they charge often doesn't cover their costs. They don't like customers that don't pay it off in full - too much risk and too much cost.

 

BrownTown

Diamond Member
Dec 1, 2005
5,314
1
0
Sounds like a good idea to me, giving people credit who didn't deserve it is exactly what got us here.
 

Hayabusa Rider

Admin Emeritus & Elite Member
Jan 26, 2000
50,879
4,265
126
Originally posted by: TheSlamma
Originally posted by: Linux23
So wait? How are people supposed to buy shit they really don't need?
Best post in here.

Indeed. Credit is what drives the economy, and if people are unable to live beyond their means( I'm NOT saying that's a good thing), then consumer spending will significantly slow. Less dollars spent means business in trouble.

I think you've seen nothing until the personal credit crunch hits, and people just write off their debt.

If Uncle Sam were smart (and of course it's not), there should be implemented a tax credit program linked to the reduction of personal debt. That wouldn't automatically prevent a spending slow down, but it would improve the average citizens financial situation so that when hard times do hit, they'd be in better shape to weather it.