Bah, Humbug!
A Christmas without credit cards? What lower limits mean this holiday shopping season.
PHOTOS
What About Us?
Wall Street's problems have captured the attention of Congress, the White House and the media. But on the country's Main Streets, worried workers, struggling small business owners and cash-strapped families are wondering if anyone is paying attention to them. A look at how Americans are coping with the economic crisis.
Here's a scenario that will be more common this holiday season: You fill your arms with purchases and head to the register, where you've been told you'll receive a 20 percent discount by applying for and using the store's credit card. That will help, because you're already nearing your MasterCard limit. But a moment later, the teenage salesgirl says, "Sorry, you've been denied." You slink out, gifts left at the counter, angry and a little bit ashamed, too. Didn't the store encourage you to ask for the card?
That's just one of many ways that this is going to be a different kind of Christmas, as retailers' biggest season collides with newly tightened standards from credit-card companies. Banks and other card issuers have been ratcheting down consumer credit limits, raising interest rates, closing down accounts completely and getting tougher about whom they'll give their cards to in the first place. "Every issuer is looking at this," says John Ulzheimer, president of consumer education for credit.com. "It's one of the top two issues we are hearing about from consumers, and that is a significant change." Since few card issuers are willing to disclose their decisions, it's unclear exactly how many Americans will be affected this holiday season.
At the same time, retailers are trying to fight back by pushing their own cards and starting Christmas sales and displays early. Customers can be expected to use less credit and more cash, propelling them to local stores and away from online merchants. Analyst Dana Telsey, of the equity research and consulting firm the Telsey Advisory Group, expects an even slower holiday season than the anemic one that's been projected. The National Retail Federation had been predicting a 2.2 percent increase in sales this holiday season, the slowest growth in six years, and that was before October's credit meltdown. Sales of big-ticket items like flat-screen TVs could be particularly weak, because the usual "one year, no payments, no interest" offers that often accompany those sales won't be as plentiful.
Credit may be more easily available at retailers like Target and Nordstrom, which own and manage their own credit-card programs. Most retailers turn that process over to banks, which use their own credit standards to vet customers applying for the store cards. That's how consumers can end up caught at the register between a merchant pushing new plastic and the issuing bank behind the program saying no.
Card issuers are making the adjustments to reduce their risk, says Ken Clayton of the American Bankers Association. "We are taking a more aggressive look at customers' risk profiles and their performance with us," says Bank of America spokeswoman Betty Riess. "We are closing some inactive accounts and tightening credit. We may adjust customers' lines."
American Express has reduced credit limits on one of every 10 customer accounts and is evaluating everything from the job and real-estate markets in customers' communities to individual customers' credit scores, payment histories and spending patterns. AmEx has admitted that it looks askance at "certain merchants"—though it hasn't identified which ones—who it says show up in the charges of customers with a higher probability of default, according to Kim Forde, a company spokeswoman. Credit.com's Ulzheimer says he has heard a subprime credit-card issuer admit to cutting credit on customers who patronize bars and marriage counselors.
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Member Comments
Posted By: crwcpa @ 10/25/2008 3:22:01 PM
Comment: Unsecured debt should not be legal. It is the true cancer within our financial system and not one elected official has the strength to talk to the American people about how their immaturity and gluttony is crippling our childrens' future. It is the greatest problem our families face, yet very little attention has been focused on it for fear of estranging a constituency.
Posted By: Nowforthetruth @ 10/24/2008 2:09:04 PM
Comment: See also: http://www.newsweek.com/id/164972
Stating that Gramm-Leach-Bliley Act wasn't what caused the meltdown, and noting that "economists on both sides of the political spectrum have suggested that the act has probably made the crisis less severe than it might otherwise have been."
Posted By: Nowforthetruth @ 10/24/2008 2:08:11 PM
Comment: Spread the wealth how? Look at his past. Obama in this video, addressing his work with ACORN litigation against the banks and relating to the Community Reinvestment Act and the failure of Freddie Mac and Fannie Mae, as they relate to the current real estate and financial crisis, states that, and I quote:
"Subprime lending started out as a good idea, helping Americans buy homes who previously could not afford to. Financial institutions created new financial instruments that could securitize these loans, slice them into finer and finer risk categories, and spread them out among investors and around the country, as well as around the world. In theory, this should have allowed mortgage lending to be less risky, and more diversified."
"The original idea was a good one, which was, lets see if we can distribute risk more broadly, and make it easier to provide loans to people who otherwise might not be able to get one."
Listen for yourself. You cannot dispute the mans on words recorded live:
http://www.youtube.com/watch?v=Lr1M1T2Y314&feature=related
Obama in this second video is campaigning at a convention of Acorn and I believe two other Community Activist's organizations. Ask if he will be their ally if he becomes President, Obama says, quote:
"Yes, but let me say that before I even get inaugurated, during the transition we are going to be calling all of you in to help us shape the agenda."
See and hear it for yourself. Obama promised that Acorn and other groups like it will setting his agenda if elected:
http://www.youtube.com/watch?v=8vJcVgJhNaU
Below is a link to C-SPAN video clips of the Congressional hearings at roughly the time McCains attempt at S.190. to fix Fannie and Freddie. See for yourself who said what.
http://www.youtube.com/watch?v=_MGT_cSi7Rs
See also
http://www.newsweek.com/id/164732 from this web site. (oops!) stating that Freddie Mac was spending tax payer money to target Republicans in 2005 who were trying to regulate Fannie and Freddies fraud. Democrats were not targeted, as the were all in the tank with Fannie and Freddie to kill the regulations. Hear that, the article admits that Republicans were trying to regulate Freddie and Fannie, and Democrats were trying to stop it from happening as a means to facilitate the Community Reinvestment Act.
See also: http://www.newsweek.com/id/164972
Stating that Gramm-Leach-Bliley Act wasn't what caused the meltdown, and noting that "economists on both sides of the political spectrum have suggested that the act has probably made the crisis less severe than it might otherwise have been."