For the most part, these credit-card reductions are affecting the unused portion of consumer credit lines. Someone who has a $20,000 credit limit but is only using $5,000 of their borrowing power may see their credit limit cut to $10,000. In other cases, issuers are "chasing the balance"—in the above example, they would cut the credit limit to the $5,000 level. As the customer pays the balance down to, say, $4,000, the limit would also be decreased, to $4,000.
All of that has hurt consumers' credit scores, because one important element of the score is the percentage of available credit being used. The higher that percentage, the worse the score. Consumers who see their scores fall will have a harder time getting car loans, home-equity lines of credit and those store-based credit cards.
Tightening credit limits will force some consumers to spend less this holiday season or to spend as they go, with cash and debit cards, rather than with credit cards. That may be better for their bottom line, but worried retailers are starting the season early in the hopes of snagging more of those customers who have to spread out their holiday spending over a longer period. The trees and toys have been out for almost a month at Neiman Marcus and Wal-Mart, notes analyst Telsey.
For consumers, the silver lining is prolonged, deep discounting as the holiday season begins. But before heading to the register, they'd be smart to double-check their limit. Issuers send letters to cardholders when they're cutting their credit, but "those notices aren't designed to be noticed," says Ulzheimer. That means you may have thrown it out with the credit-card offers that are still coming, albeit less frequently, in the mail. Charge more than your new line allows and you could be rejected at the register or hit with a $30 over-limit fee. And that's worse than embarrassing.
© 2008
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.
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."
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."
The crisis has forced the United States to confront bad habits developed over the past few decades. If we can kick those habits, today's pain will translate into gains.
MEDIA Just a year after buying The Wall Street Journal, the press rapscallion has revitalized the fusty paper.
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