Credit card industry may cut $2 trillion of lines: analyst

[WoodysGirl]

Mon Dec 1, 3:02 am ET

(Reuters) – The U.S. credit card industry may pull back well over $2 trillion of lines over the next 18 months due to risk aversion and regulatory changes, leading to sharp declines in consumer spending, prominent banking analyst Meredith Whitney said.

The credit card is the second key source of consumer liquidity, the first being jobs, the Oppenheimer & Co analyst noted.

"In other words, we expect available consumer liquidity in the form or credit-card lines to decline by 45 percent."

Bank of America Corp, Citigroup Inc and JPMorgan Chase & Co represent over half of the estimated U.S. card outstandings as of September 30, and each company has discussed reducing card exposure or slowing growth, Whitney said.

A consolidated U.S. lending market that is pulling back on credit is also posing a risk to the overall consumer liquidity, Whitney said.

Mortgages and credit cards are now dominated by five players who are all pulling back liquidity, making reductions in consumer liquidity seem unavoidable, she said.

"...We are now beginning to see evidence of broad-based declines in overall consumer liquidity."

"In a country that offers hundreds of cereal and soda pop choices, the banking industry has become one that offers very few choices," Whitney wrote in a note dated November 30.

She also said credit lines to consumers through home equity and credit cards had been cut back from the second-quarter levels.

"Pulling credit when job losses are increasing by over 50 percent year-over-year in most key states is a dangerous and unprecedented combination, in our view," the analyst said.

(Reporting by Neha Singh in Bangalore; Editing by Vinu Pilakkott)


http://news.yahoo.com/s/nm/20081201/bs_nm/us_finance_research_oppenheimer

[Maikeru-sama]

I wouldn't mind seeing a study to see how many of these people that will get their CLs cut had very marginal Credit Scores or have very large balances.

However, on Talk Radio, I have heard stories of small business owners getting their CLs cut and this is really effecting how they do business.

Hopefully the Credit Card Companies will show some discretion and only cut CLs or cancel Credit Card of those that deserve it.

[Phrozen Phil]

I wouldn't mind seeing a study to see how many of these people that will get their CLs cut had very marginal Credit Scores or have very large balances.

However, on Talk Radio, I have heard stories of small business owners getting their CLs cut and this is really effecting how they do business.

Hopefully the Credit Card Companies will show some discretion and only cut CLs or cancel Credit Card of those that deserve it.

One hopes that good business acumen will prevail. If people have huge credit card debt, then those credit cards are probably not suitable for them. If small businesses are being denied credit unreasonably, then maybe the banks need to give the bail-out money back. The whole idea of that package was to get credit moving again.

[iceberg]

I wouldn't mind seeing a study to see how many of these people that will get their CLs cut had very marginal Credit Scores or have very large balances.

However, on Talk Radio, I have heard stories of small business owners getting their CLs cut and this is really effecting how they do business.

Hopefully the Credit Card Companies will show some discretion and only cut CLs or cancel Credit Card of those that deserve it.

i had one interest rate double for no reason. i paid over the balance at every payment and it was always on time. when i asked for it to be lowered i was more or less laughed at. when i asked why it was doubled, they said "various information led to this decision".

i can only assume my leaving helio and them never sending me a final bill then calling me 3-4 times a day demanding payment was an issue. i demanded they send me a bill and they said 'just pay over the phone now'.

no. i looked up the number and found some interesting threads online about it being fake. so i said again, send me a bill and i'll pay it. about 2-3 weeks later i got the bill and yes, i was still mad so i dragged my feet and finally paid it, albiet very late now by their standards. so i have 1 late pay on my credit now. money moved to another card that i'm working to pay off now.

another card lowered the credit to almost worthless (lowes home improvements, good. i am paying that off anyway) and my paypal card was also cut into like 1/3. always paid on time, never late, always over the amount and in fact, there was a zero balance on there when they did it. when i asked why, they said "various information from various places". never specific. so i just said "fine, not using it, cancel it.

for a long time i kept debt no higher or roughly the same amount as my stock value so if i lost a job, sell stocks and be out of debt. so, the massive stock dive makes that harder to do but i may have to in order to pay off one of the bigger cards and simply keep the "line of credit" open so to speak so i don't appear so pressed on used vs. open credit - a huge factor they're looking at now.

the card i moved my money off of i'll leave open or otherwise i'm even tighter on available credit and the problems would likely mount up.

i'm currently a med-low risk and on the "low" risk side of that by a small margin. i've had the same job for going on 16 years now but yes, credit card offers can should be harder to get - myself included. not because i can't pay it all today but because none of us know where things are going.

so, to the point of the article, yep. credit lines are getting slashed and cut all over. i expect another hit or two while i learn the new rules and payout what i can on my low hanging fruit of credit cards, then focus on the big ones.

[iceberg]

One hopes that good business acumen will prevail. If people have huge credit card debt, then those credit cards are probably not suitable for them. If small businesses are being denied credit unreasonably, then maybe the banks need to give the bail-out money back. The whole idea of that package was to get credit moving again.

small business is likely LLC and that's derived from personal income, not business really. it's all the same thing to the government/credit agencies. i got 3 business cards in my time on a company that never made a dime, it all fell to my personal income/day job. it was just cool to have my business name on the card. all those cards are gone and i'm paying down the debt now.

i think the whole bank movement needs to be to have people get smarter about money, not get credit moving again.

[Phrozen Phil]

i had one interest rate double for no reason. i paid over the balance at every payment and it was always on time. when i asked for it to be lowered i was more or less laughed at. when i asked why it was doubled, they said "various information led to this decision".

i can only assume my leaving helio and them never sending me a final bill then calling me 3-4 times a day demanding payment was an issue. i demanded they send me a bill and they said 'just pay over the phone now'.

no. i looked up the number and found some interesting threads online about it being fake. so i said again, send me a bill and i'll pay it. about 2-3 weeks later i got the bill and yes, i was still mad so i dragged my feet and finally paid it, albiet very late now by their standards. so i have 1 late pay on my credit now. money moved to another card that i'm working to pay off now.

another card lowered the credit to almost worthless (lowes home improvements, good. i am paying that off anyway) and my paypal card was also cut into like 1/3. always paid on time, never late, always over the amount and in fact, there was a zero balance on there when they did it. when i asked why, they said "various information from various places". never specific. so i just said "fine, not using it, cancel it.

for a long time i kept debt no higher or roughly the same amount as my stock value so if i lost a job, sell stocks and be out of debt. so, the massive stock dive makes that harder to do but i may have to in order to pay off one of the bigger cards and simply keep the "line of credit" open so to speak so i don't appear so pressed on used vs. open credit - a huge factor they're looking at now.

the card i moved my money off of i'll leave open or otherwise i'm even tighter on available credit and the problems would likely mount up.

i'm currently a med-low risk and on the "low" risk side of that by a small margin. i've had the same job for going on 16 years now but yes, credit card offers can should be harder to get - myself included. not because i can't pay it all today but because none of us know where things are going.

so, to the point of the article, yep. credit lines are getting slashed and cut all over. i expect another hit or two while i learn the new rules and payout what i can on my low hanging fruit of credit cards, then focus on the big ones.

Shouldn't you have a right to know precisely what the "various information" is and what the "sources" are? That's your information, and your lenders need to be accountable to you as much as their shareholders.

[Maikeru-sama]

i had one interest rate double for no reason. i paid over the balance at every payment and it was always on time. when i asked for it to be lowered i was more or less laughed at. when i asked why it was doubled, they said "various information led to this decision".

i can only assume my leaving helio and them never sending me a final bill then calling me 3-4 times a day demanding payment was an issue. i demanded they send me a bill and they said 'just pay over the phone now'.

no. i looked up the number and found some interesting threads online about it being fake. so i said again, send me a bill and i'll pay it. about 2-3 weeks later i got the bill and yes, i was still mad so i dragged my feet and finally paid it, albiet very late now by their standards. so i have 1 late pay on my credit now. money moved to another card that i'm working to pay off now.

another card lowered the credit to almost worthless (lowes home improvements, good. i am paying that off anyway) and my paypal card was also cut into like 1/3. always paid on time, never late, always over the amount and in fact, there was a zero balance on there when they did it. when i asked why, they said "various information from various places". never specific. so i just said "fine, not using it, cancel it.

for a long time i kept debt no higher or roughly the same amount as my stock value so if i lost a job, sell stocks and be out of debt. so, the massive stock dive makes that harder to do but i may have to in order to pay off one of the bigger cards and simply keep the "line of credit" open so to speak so i don't appear so pressed on used vs. open credit - a huge factor they're looking at now.

the card i moved my money off of i'll leave open or otherwise i'm even tighter on available credit and the problems would likely mount up.

i'm currently a med-low risk and on the "low" risk side of that by a small margin. i've had the same job for going on 16 years now but yes, credit card offers can should be harder to get - myself included. not because i can't pay it all today but because none of us know where things are going.

so, to the point of the article, yep. credit lines are getting slashed and cut all over. i expect another hit or two while i learn the new rules and payout what i can on my low hanging fruit of credit cards, then focus on the big ones.

Interesting.

I have to be honest in that I have not paid attention to my Credit Card balances and the Interest Rate. I have an AMEX Blue and a BOA Credit Card. I use them like Debit Card, meaning if I don't have matching funds in the bank, then I don't buy the product, so that is why I don't pay much attention to the Credit Limit and Interest Rate, but I will probably do some research and see if my Credit Limit has been lowered.

I was talking to a co-worker last week and she said one of her cards were closed and the reason given was that she wasn't using them.

I just hate to see good people who live beyond their means and have a strong history of timely payments getting hurt because of the people who did the opposite.

Don't know about you, but I am very resentful of people getting bailout money because it just drives the point home that you can mess up and get things you can't afford because the folks he live within their means will help you get back on your feet :rolleyes: .

[Maikeru-sama]

Shouldn't you have a right to know precisely what the "various information" is and what the "sources" are? That's your information, and your lenders need to be accountable to you as much as their shareholders.

Not sure, but I bet when you sign up for a Credit Card, I think they always have some literature stating that they can change things legally without the consent of the applicant.

I never read the fine print, but legally, I bet they have covered themselves.

[iceberg]

Shouldn't you have a right to know precisely what the "various information" is and what the "sources" are? That's your information, and your lenders need to be accountable to you as much as their shareholders.

probably, but the dude on the phone who fields calls for a living isn't going to give that info out. i had to get onto freecreditreport.com and look it up myself in the best way they could explain it. i find it hard to believe 1 late payment could cause this but in this climate, maybe it's not so hard to believe after all.

[Maikeru-sama]

One hopes that good business acumen will prevail. If people have huge credit card debt, then those credit cards are probably not suitable for them. If small businesses are being denied credit unreasonably, then maybe the banks need to give the bail-out money back. The whole idea of that package was to get credit moving again.

True, but I was listening to one individual on the radio a few weeks ago stating that his business had grown so much, that he was in the process of expanding it and adding a new location. He was going to use his Business Credit Card but with the credit crunch, they vastly reduced his Credit Limit and now those plans are on hold.

Now, this new situation is not going to force the guy to starve, but it is preventing him from expanding his business and realize income, which with inflation, he will probably never recoup.

[iceberg]

Interesting.

I have to be honest in that I have not paid attention to my Credit Card balances and the Interest Rate. I have an AMEX Blue and a BOA Credit Card. I use them like Debit Card, meaning if I don't have matching funds in the bank, then I don't buy the product, so that is why I don't pay much attention to the Credit Limit and Interest Rate, but I will probably do some research and see if my Credit Limit has been lowered.

I was talking to a co-worker last week and she said one of her cards were closed and the reason given was that she wasn't using them.

I just hate to see good people who live beyond their means and have a strong history of timely payments getting hurt because of the people who did the opposite.

Don't know about you, but I am very resentful of people getting bailout money because it just drives the point home that you can mess up and get things you can't afford because the folks he live within their means will help you get back on your feet :rolleyes: .

well, i could still cash out some of my own private mutual funds and pay off my debt, but the value of those is now to the point of where my initial investment was 6 years ago. all i can do is start knocking out what i can, take any extra money to focus on the debt, pay off 2 cards i really don't need in the next 2-3 months, pay off another here this month and let it go.

i won't cancel these cards, just not have a balance and yes, they may get auto-cancelled due to lack of use. i had (2) from wells fargo do just that i only found out about when i called to move money from the interest rate hike on the other card.

it's a tough time. i can and will pay this off and be fine in the end. i may go ahead and sell local stock not doing anything and just lose 1 more card and cut my debt in 1/3 and reshift payments to the other cards to bring them down faster.

just another time, just another adjustment to how i get by.

[Maikeru-sama]

well, i could still cash out some of my own private mutual funds and pay off my debt, but the value of those is now to the point of where my initial investment was 6 years ago. all i can do is start knocking out what i can, take any extra money to focus on the debt, pay off 2 cards i really don't need in the next 2-3 months, pay off another here this month and let it go.

i won't cancel these cards, just not have a balance and yes, they may get auto-cancelled due to lack of use. i had (2) from wells fargo do just that i only found out about when i called to move money from the interest rate hike on the other card.

it's a tough time. i can and will pay this off and be fine in the end. i may go ahead and sell local stock not doing anything and just lose 1 more card and cut my debt in 1/3 and reshift payments to the other cards to bring them down faster.

just another time, just another adjustment to how i get by.

My bad, Iceberg, some of what you wrote flew right over my head. When you talked about your Interest Rates going up, I didn't realize you actually had balances on those Credit Cards.

Yeah, you sound like me. I hate debt so much, I was actually going to raid my 401K and pay off my Student Loan.

I think you will be fine.

Also, I think it is pure BS for them to raise your Interest Rates like that. The Credit Card Companies have always been vultures and scum.

[iceberg]

My bad, Iceberg, some of what you wrote flew right over my head. When you talked about your Interest Rates going up, I didn't realize you actually had balances on those Credit Cards.

Yeah, you sound like me. I hate debt so much, I was actually going to raid my 401K and pay off my Student Loan.

I think you will be fine.

Also, I think it is pure BS for them to raise your Interest Rates like that. The Credit Card Companies have always been vultures and scum.

yea, i don't want to get into numbers overall, but there was a nice chunk of change on there. i told them 9% of this debt is better than 0% because i damn sure won't leave it at 21%. they may be scum, predatory and vultures, but i'm the one who left it alone for so long and just lived with it. my job looks safe for the immediate/long term future, but i don't want to rest on that and stay lazy w/it. i need to pay it off and do what most people do, pay as i go. getting rid of credit would also make this much easier.

[Maikeru-sama]

yea, i don't want to get into numbers overall, but there was a nice chunk of change on there. i told them 9% of this debt is better than 0% because i damn sure won't leave it at 21%. they may be scum, predatory and vultures, but i'm the one who left it alone for so long and just lived with it. my job looks safe for the immediate/long term future, but i don't want to rest on that and stay lazy w/it. i need to pay it off and do what most people do, pay as i go. getting rid of credit would also make this much easier.

Agreed.

You will be fine.

[sacase]

Part of what you are seeing is what is going on with the credit industry in general, not really related to the economic problems. Basically if you are not using their cards then there is no reason for you to have one, so they are taking you off their books.

The credit reductions is they are taking a bigger interest in your credit report. A 30 day late on your credit report can really knock your credit rating as well as carrying a high balance. You typically want 30% or less of a balance. If you have a high balance like 80-90% then its a sign that you cannot manage yoru credit so they may boost the interest rate up or reduce your limits. Remember this is a business for them and they are trying to make money

The interesting part of all this is you are partially judged by how much availible credit you have, so this could adversly affect your credit score through no fault of your own. Basically with the new credit scoring that Fair Issaacs issued recently, you have to actively use your credit to maximize your credit score.

[Maikeru-sama]

The Credit Card Companies decisions to cut CLs and cancel CCs has directly to do with the Credit Crunch.

There is no way they are doing all of this if we are not in the midst of one of the biggest financial crisis in our nation's history.

And as I stated, there are people who use their Credit Card and have a great payment history, who are getting their CLs cut or in some cases, cancelled.

[Maikeru-sama]

Also, you have always been judged on the amount of credit that you have available. That is why people hate Crap One because they don't report Credit Limits, the last time I checked.

And yes, the new Scoring Model is all about trying to lessen the playing field even more, with regards to Lenders vs. Borrowers.

[iceberg]

Part of what you are seeing is what is going on with the credit industry in general, not really related to the economic problems. Basically if you are not using their cards then there is no reason for you to have one, so they are taking you off their books.

The credit reductions is they are taking a bigger interest in your credit report. A 30 day late on your credit report can really knock your credit rating as well as carrying a high balance. You typically want 30% or less of a balance. If you have a high balance like 80-90% then its a sign that you cannot manage yoru credit so they may boost the interest rate up or reduce your limits. Remember this is a business for them and they are trying to make money

The interesting part of all this is you are partially judged by how much availible credit you have, so this could adversly affect your credit score through no fault of your own. Basically with the new credit scoring that Fair Issaacs issued recently, you have to actively use your credit to maximize your credit score.

yea, my problems are that 1 late payment (not 100% my fault but that doesn't matter when it comes to this) and then me getting mad and cutting my cards off because "it will show them". that only reduces available credit and i don't reduce debt to match, i wind up hurting myself.

the problem is these rules change as the creditors need them to. 1 year ago neither of these issues would have even gotten their attention. now it does, and it should to be honest.

but i do wish they'd take overall history into account but then again, it's the recent history hurting so much.

catch 22. in the end keep up and follow along or pay extra to stay apathetic to the situation.

[DIAF]

My mom received a notice from the bank that handles Sears CCs that they were cancelling her Sears card due to lack of activity.

Funny thing is, she hasn't had a SEARS card since 1989 when she cancelled it.

The CC Companies are so desperate to cut lines of credit, they are just spamming cancel notices to anyone in their database.

[iceberg]

My mom received a notice from the bank that handles Sears CCs that they were cancelling her Sears card due to lack of activity.

Funny thing is, she hasn't had a SEARS card since 1989 when she cancelled it.

The CC Companies are so desperate to cut lines of credit, they are just spamming cancel notices to anyone in their database.

funny. sears did something like this to me also, only 4-6 years ago. i long since cancelled it and thought it done. a few years later, i got a "new" card in the mail. i called and told them i didn't want it and we all moved on.

my guess is they're also just cleaning up their system and ensuring all "potential" debt is off the books.

we'll see a lot of this in 2009 i imagine and we have to tighten up lazy habits - myself leading the charge.

[Maikeru-sama]

Yes, make no mistake about it, the Credit Cards and the Credit Bureaus always set the rules to favor themselves and not the individuals.

I am not sure when this so called Vantage Score is coming out, but I read an article stating that people that have A+ Credit, like myself, could have A or even B Credit under this new scoring model.

Also, notice that having no Credit is just as bad as having bad Credit? The Credit Bureaus and the CCCs force you to play their game and of course they get to change the rules how they see fit.

My advice to everyone is to use all Credit Cards like Debit Cards. If you don't have it in the bank, do not put it on Credit.

[sacase]

The Credit Card Companies decisions to cut CLs and cancel CCs has directly to do with the Credit Crunch.

There is no way they are doing all of this if we are not in the midst of one of the biggest financial crisis in our nation's history.

And as I stated, there are people who use their Credit Card and have a great payment history, who are getting their CLs cut or in some cases, cancelled.

No you were seeing this already, I am sure some of it has to do with the credit crisis, but companies were already doing this before the crisis.

[sacase]

Yes, make no mistake about it, the Credit Cards and the Credit Bureaus always set the rules to favor themselves and not the individuals.

I am not sure when this so called Vantage Score is coming out, but I read an article stating that people that have A+ Credit, like myself, could have A or even B Credit under this new scoring model.

Also, notice that having no Credit is just as bad as having bad Credit? The Credit Bureaus and the CCCs force you to play their game and of course they get to change the rules how they see fit.

My advice to everyone is to use all Credit Cards like Debit Cards. If you don't have it in the bank, do not put it on Credit.

Personally I carry small balances on my cards. Stuff that I pay off every month. This way it shows as activity. All my balances are 150 or less.

I read that you should have 2 major credit cards, 2 store cards and a gas card if you want to maximize your credit rating.

[Phrozen Phil]

funny. sears did something like this to me also, only 4-6 years ago. i long since cancelled it and thought it done. a few years later, i got a "new" card in the mail. i called and told them i didn't want it and we all moved on.

my guess is they're also just cleaning up their system and ensuring all "potential" debt is off the books.

we'll see a lot of this in 2009 i imagine and we have to tighten up lazy habits - myself leading the charge.

One of the challenges for consumers at this time of year is the shopping without pushingg your credit cards too much. We get conflicting messages that, on the one hand, we need to be careful with our spending, while getting the other message that we need to buy our spouse a Lexus to make this "A Christmas to remember" or to our local jeweller beacuse "a Diamond is forever". If you spend like you're Daddy Warbucks, then your a generous family member or a major credit risk. If you hold the line on spending, you're Ebeneezer Scrooge or a responsible user of credit. Unless you're wealthy, you lose.

[ThaBigP]

Mon Dec 1, 3:02 am ET

(Reuters) – The U.S. credit card industry may pull back well over $2 trillion of lines over the next 18 months due to risk aversion and regulatory changes, leading to sharp declines in consumer spending, prominent banking analyst Meredith Whitney said.

The credit card is the second key source of consumer liquidity, the first being jobs, the Oppenheimer & Co analyst noted.

"In other words, we expect available consumer liquidity in the form or credit-card lines to decline by 45 percent."

Bank of America Corp, Citigroup Inc and JPMorgan Chase & Co represent over half of the estimated U.S. card outstandings as of September 30, and each company has discussed reducing card exposure or slowing growth, Whitney said.

A consolidated U.S. lending market that is pulling back on credit is also posing a risk to the overall consumer liquidity, Whitney said.

Mortgages and credit cards are now dominated by five players who are all pulling back liquidity, making reductions in consumer liquidity seem unavoidable, she said.

"...We are now beginning to see evidence of broad-based declines in overall consumer liquidity."

"In a country that offers hundreds of cereal and soda pop choices, the banking industry has become one that offers very few choices," Whitney wrote in a note dated November 30.

She also said credit lines to consumers through home equity and credit cards had been cut back from the second-quarter levels.

"Pulling credit when job losses are increasing by over 50 percent year-over-year in most key states is a dangerous and unprecedented combination, in our view," the analyst said.

(Reporting by Neha Singh in Bangalore; Editing by Vinu Pilakkott)


http://news.yahoo.com/s/nm/20081201/bs_nm/us_finance_research_oppenheimer

Does anybody realize how big this story really is? It's the collapse of the debt standard. We've been importing all of these cheap products made with pseudo-slave labor in exchange for our currency. But our currency is valued based on what? Not gold, we moved off the gold standard in the '70's. It's based solely on our promise to return the same value back. When we buy a foreign item, we give them a promise (a dollar) to return the same value back when they present that dollar sometime later. But we don't make anything anymore.... cars, and only for a little while longer apparently. And only at uncompetitive prices due to the lush nature of the Union contracts. Aircrft, though a lot of even that industry has been outsourced. And what do we use to buy all those things made around the world? Not even real money...CREDIT CARDS! A promise to pay the promise to perform labor later...credit! Where do all the financial titans get all the money to finance our personal credit? Investers! Here, and abroad! More abroad lately than ever, though. So...we have a system by which heretofore 3rd world countries have been sweating away in their factories to make all the "cool stuff" we want, and we then ask them to loan us the money (pledge MORE of their labor) to buy the things they made in the first place....

You see, the problem is we won't do that much labor, and when we do it will only be under the daintiest of conditions. So much of our workforce is in the "service" sector...entertainers...waiters...even bankers and other related bean-counters in the financial services sector. While many of those jobs are important, they are merely the apparatus for consuming or managing capital, not creating it. And you create capital by producing in large enough numbers of things that have intrinsic value. Like a house. Or a car. Or food. But we don't MAKE anything anymore, except for food, and the world has caught onto that fact. In fact, what happened in the SubPrime industry was this...the foreign investors lent us the money (in the form of bundled securities sold to them) to build all of these houses, these houses built by...drumroll please...imported pseudo-slave labor - who in turn were paid by these little notes pledging American labor in return for theirs. But when the bill came due, the US citizens defaulted.

They're not giving us any more money to buy the things we want made with pseudo-slave labor...that they made in the first friggin' place! But we have tons of places we CAN'T work...too prestine...or not zoned properly. We come up with elaborate schemes to receive pay without working. And petition enough lawmakers to make it law. That means you are saying that somebody, somewhere, should provide labor for you while you provide labor for nobody. In the end...we want all the "things", but not all that "getting my hands dirty" business. Let somebody else do that. "Little Red Hen" ring a bell?

The subprime mortgage debacle was just the straw that broke the camel's back. It's was a symptom of the disease....we can have it all....and not have to work for it. In other words, we don't pay our bills. We just shrug and say "well, it's a huge company, they can eat it." Then we all do it, or in large enough numbers, and using foreign labor to prop it all up, and kaboom. I sense those days are fast coming to an end...

[BrAinPaiNt]

Credit card companies, generally not all, suck.

That is why I am glad I paid all of mine off, had them cancelled and refuse to get another one. The only one I have is my gas card and I have not used it in about a year.

Paying off the cards is hard enough with the interest rates that seem to escalate at a whim. But it is even worse when you call to get a total number on your balance and say you want to pay them completely off. You will get some companies or operators on the phone that will try and tell you that you can not pay them off, that you have to stick to the regular payments...that is until you tell them you know better. They do that because they would rather keep you paying interest rates and don't want you paying them completely off.

I also love how even after you get the total number for the payoff, some companies will not add in the processing fee and so you think you have them paid off only to get a processing fee bill later which infuriates you for two reasons. One that you even have to pay a processing fee in the first place to pay off a card and the second is you asked already for the TOTAL to pay it off.

So...screw my credit rating if they don't like it. I would rather know I am completely out of debt and not be snared into their crazy traps instead of worrying about having a great credit score.

I would rather pay cash or save up to pay in cash for things now because I don't need to get back into that situation where they arrange it to basically try to keep you in debt long term.

They are in it to make money but their ethics are far from good when you see people going bankrupt and within a month they are getting pre-approved applications for the same cards they filed bankruptcy on. Or targeting freshman in college knowing the majority have no jobs or can never really pay the bills off in a reasonable time and they also know the majority of those kids are just fresh from living at home, going wild in college and will spend spend spend without thinking. It is bad enough giving them to adults but that method of recruiting for them in college is about like how the tobacco companies used to recruit youth with certain ad campaigns IMO.

Screw the credit card companies...no more of my money goes your way unless I need some gas and don't happen to have money in my pocket...aka an emergency situation.

What is funny is them canceling some of these cards for people who do not use it, some people just keep the cards in case they have an emergency like they need something for the home but only would use it in an emergency situation.

[Phrozen Phil]

I have three credit cards that I use on a regular basis, and several that are specific to a particular vendor (ie Sears) I pay off my balance when it comes in and I have never made the "minimum payment". On the rare occasion that I carry a balance, it's for the next month and no more. I do have a line of credit with my bank that I have used to purchase vehicles and large items like applainces, but that interest rate is prime plus 2%. I still get countles solicitations from banks for more cards , but thae answer is consistently NO. I'd love to get a new laptop, but I'll wait a year. It's hard to say no at times, espacially when the item is useful, reasonably priced and at the cutting edge. As a result, my cell phone isn't very sexy and I only replaced my power supply on my four year old computer. Disciplined spending is hard.

[Maikeru-sama]

Personally I carry small balances on my cards. Stuff that I pay off every month. This way it shows as activity. All my balances are 150 or less.

I read that you should have 2 major credit cards, 2 store cards and a gas card if you want to maximize your credit rating.

Yes, whenever I use my Credit Cards, I always wait for a certain date before paying them off. Every lender has a specified time period that they report your activity every month, it is on the Credit Report or you can call and ask them. I always wait until after those dates because if you constantly pay those balances off before they report, you are always showing a 0$ balance and this will hurt you when trying to get a loan or credit.

About 4 years ago, I decided to fix my credit and found a wonderful Messageboard, full of lawyers, people that work for Collections Agencies, Mortgage Companies and folks like myself trying to fix their credit. It is just like Cowboyszone in that all the techniques are free and you get a ton of information from people who know what they are talking about. My Credit Score was in the low 600s and when I was done several months later, it was in the low 700s, right now it is in the high 700s, depending upon which CR you look at. I only have an AMEX Blue and Bank of America card but at one time I did have a Chevron Card and a Washington Mutual Card, but I closed those, even though I probably shouldn't have closed my Chevron Card.

Also, nobody knows what the complete FICO score formula is. One of the main criteria was how long you had your accounts. When you have accounts that are 15 years old and in good standing, along with no lates and no baddies, then your score really starts to skyrocket. Going from 600s to 700s is somewhat difficult but going from 700s to 800s is EXTREMELY difficult. I have a friend who has had 2 Credit Cards sense he was 18 years old, a Shell and some other card, he is now like 33 and has Credit Scores in the 800s because those accounts are good and they are so old.

[jimmy40]

My mom received a notice from the bank that handles Sears CCs that they were cancelling her Sears card due to lack of activity.

Funny thing is, she hasn't had a SEARS card since 1989 when she cancelled it.

The CC Companies are so desperate to cut lines of credit, they are just spamming cancel notices to anyone in their database.Sears credit is owned by Citi and it's been screwed up since the day they bought it.