Credit Card Lines to Decline by 45% Say Credit Card Lenders

Reuters is reporting that a leading credit card industry analyst believes that major credit card lenders plan to reduce lines of credit by over $2 trillion over the next 18 months.  Consumer liquidity will decline by approximately 45% says Meredith Whitney a banking analyst for Oppenheimer & Company.

Leading credit card lenders like Bank of America, Citigroup and Chase have incurred larger than normal losses due to increasing consumer defaults.

What does this mean to you?  If you are like many struggling Tennesseans, credit card lines of credit serve as a key source of consumer liquidity.  If your credit line is cut from $20,000 to $10,000 your emergency safety line will be that much smaller.   Do not be surprised to see your credit line reduced to a level below your current balance, meaning that you will being seeing overlimit fees not because you exceeded your limit, but because the credit card lender reduced that limit.

Consumer advocates recommend that you should avoid accessing more than 30 to 40% of your available credit line.  If you find yourself servicing larger balances than this, now is the time to start chipping away at those balances.

We also expect to see more bankruptcy filers who are forced into Chapter 7 or Chapter 13 because their credit card lenders will be taking an extremely hard line on overlimit fees and penalty interest rates.   Although we are a bankruptcy firm, we encourage all of neighbors not to let these hardline credit card industry policies drive you into bankruptcy.