Where has my Credit Limit Gone? The Reason why Credit Lines are Disappearing
The credit industry is in a bit of a tight situation. The new credit card legislation has changed the practices of the industry, which has left many creditors struggling to make a profit.
As with most everything else, there are positive angles and not-so-positive angles with change. Although the new credit card legislation was designed to help consumers and reign in on the questionable practices of the credit card industry, it has also created turmoil as creditors seek to find other ways to either make a profit or simply keep their losses to a minimum.
Creditors begin to make Changes
A perfect example of this is that many creditors are cutting back credit lines to less-than-stellar customers in an attempt to cut waste; and the easiest way to do that is to cut their credit lines, either by hacking their credit limits or by simply cutting them off for good.
In the past, creditors sought out nearly any type of customer, and did so with low interest rates, promotional rates, and even gifts and rebates. Times have certainly changed, though, and now creditors are scrambling to find these consumers and cut their chances of incurring debt and not paying it back. In other words, creditors must act because their hands are tied and their profits are dwindling.
What we can begin to Expect
Some of the actions from the credit card industry that we can expect to see include: cutting off all inactive accounts; cutting off subprime consumers; and reducing the credit lines for countless others.
Many industry experts believe that creditors may cut nearly $1.2 trillion worth of credit to consumers this year alone, and that by 2010 the number is expected to rise to $2.7 trillion.
For many of us, our credit cards serve as an everyday convenience, as well as a lifeline in case of emergency situations. It is therefore in our best interest to do what we can to keep the credit we already have, as to protect ourselves and our credit score.
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