Credit Crunch - I am just amazed at this stunt.. Oh yea other family news shared too

[PigsDad Senior Member Find all posts View Profile Close PigsDad]

Obviously it is a good time to get out of debt as much as possible but realizing that if you remove the debt that you may also lose the credit too makes it a tough decision to pay off the debt or keep some money in the bank and pay the interest.

I am glad we do not need to apply for a mortgage or buy a new car soon!

I, too, believe it is a good time to reduce our debt. But I wonder if I should be agressively paying down our mortgage as fast as we have been. We have over 50% equity (even w/ the home value drop). Would it be better to be socking that extra $$ in a savings account right now? If we stick to our plan, we will have the house paid off in full in 6.5 years. It sure would be nice to done with that before we start encountering college bills, though...

Kurt

[joycapecod Silver Contributor Find all posts View Profile Close joycapecod]

That is quite possible Kurt. Of course it could be considered "red lining" if the FED gets involved and investigates.

DH and I haven't had any problems with credit line reductions. We are constantly receiving more and more offers in the mail to open new lines. We received two just today and shredded them.

It would be interesting to see what areas of the country are affected. Unfortunately I don't think that is a study we will ever see.

Joy

[Guest Close Quarterbore]

The accounts they did this to never had big balances on them and like you we never requested the credit increase but we would charge a bunch of stuff and then pay it off in a month or two and sometimes paid interest and they would up the credit limit.

I do have revolving debt however and we do live in an area that had inflated housing costs and I really hate to think what our home would sell for now so we just won't be selling it.

My guess is that banks may need to have assets to cover these credit lines and perhaps the banks are pulling back these potential obligations to prevent other banks from buying them or to allow them the resources to buy others?

Either way, it is funny how the government is trying to get these companies to lend money and in reality they are pulling credit that I would assume has the potential to have the opposite effect.

[jericap Super Moderator Find all posts View Profile Close jericap]

Congratulations on the new baby!!! I love babies! They make everything new again..no matter how many you have, the first smile is great, their first steps are like you've never seen a baby walk before.

My two cents on the CC issue.....
Maybe the credit card company wasn't making enough money off of you. Let's face it, all businesses deal in the bottom line. If you pay everything off in a couple of months, they see it as a card of convenience and probably don't care what your credit limit is. They're not making money from you

if you carried a 10k balance most of the time, just think of the monthly interest payment alone. Those are the customers they like, someone who will continue to pay them on a monthly basis and increase their bottom line.


Glitter....Love that expression about the loaf of bread, it is so true.

[4ARedOctober Super Moderator Find all posts View Profile Close 4ARedOctober]

Congrats on the new coming addition to the family. Kids are great.

Regarding the credit card issues......Credit Card debt is the next shoe to fall in this economic crisis. There are large looming defaults ahead.

Business Week has a good article on this and addresses why you are having the issues you are.

The Next Meltdown: Credit-Card Debt - BusinessWeek

The Next Meltdown: Credit-Card Debt
Rising rates are accelerating credit-card defaults and soured debt could further undermine the financial system

The troubles sound familiar. Borrowers falling behind on their payments. Defaults rising. Huge swaths of loans souring. Investors getting burned. But forget the now-familiar tales of mortgages gone bad. The next horror for beaten-down financial firms is the $950 billion worth of outstanding credit-card debt—much of it toxic.

[tonyg Goomba & Super Moderator Find all posts View Profile Close tonyg]

...
My two cents on the CC issue.....
Maybe the credit card company wasn't making enough money off of you. Let's face it, all businesses deal in the bottom line. If you pay everything off in a couple of months, they see it as a card of convenience and probably don't care what your credit limit is. They're not making money from you

if you carried a 10k balance most of the time, just think of the monthly interest payment alone. Those are the customers they like, someone who will continue to pay them on a monthly basis and increase their bottom line.
....

On the other hand, cards with a high balance may be considered risky in a recessionary time. They make money whenever you use the card and lose money when someone goes bankrupt with a balance owed.

[Steamboat Bill Banned Find all posts View Profile Close Steamboat Bill]

I have had a HELCO that I never used in 3 years. So I activated it last month with a $1k check written to myself figuring I did not want them to close it for no activity.

One week later they lowerd my limit by over 60%

So far none of my CC have been affected but I pay them off every month.

[4ARedOctober Super Moderator Find all posts View Profile Close 4ARedOctober]

Same here....they call us 'deadbeats' and don't make as much from us.

I wonder how this is affecting people who have been churning cards to get the points/miles.

So far none of my CC have been affected but I pay them off every month.

[basham Senior Member Find all posts View Profile Close basham]

Ken,

Congrats on the addition to the family. Some things are more important than others. That is one.

I'm probably an at risk person. Little cc debt but I have 3 kids who needed to go to college.

I used a home equity loan to do so at approx. 35% of value when taken out.
Still need to draw on it to get the last one all through.

Surprised that everyone is in such good shape, so far. I think there are a lot more out there in worse shape.

[happymum Senior Member Find all posts View Profile Close happymum]

Congratulations on your pending arrival. New babies are fabulous!

[billymach4 Super Moderator Find all posts View Profile Close billymach4]

Big Daddy... Congrats on the new addition.

I wish those stupid CC companies, and Banks especially WaMu (I thought they went out of business) would stop sending me those teaser offers. Same goes for the HELOC's.

Nobody has lowered my limits. They dare not. I can buy them out at this point. (Joking).

You might want to check your credit score, and history. They have a strange way of interpreting those histories that is only proprietary to the lending industry.

[Spence Super Moderator Find all posts View Profile Close Spence]

I bought a couple condos in the last 11 months, both with 20% down and No Doc or Straight to Close.... tried for a third yesterday, no dice! But none of my CCs nor my large HELOC have suffered yet.

[falmouth3 Senior Member Find all posts View Profile Close falmouth3]

I'd like to add my congratulations too!

I saw Suze Ormand talking about credit cards. She said not to cancel credit cards. That will reduce your credit score so she recommends leaving them open. Opening more credit card accounts increases your credit score. Seems counterintuitive to me. But I'll keep those unused accounts open. Having the cards doesn't make me want to spend more. We charge just about everything and pay off our bills. But we are very thrifty people.

[susieq Senior Member Find all posts View Profile Close susieq]

CONGRATS ON YOUR MUCH ANTICIPATED ARRIVAL!!
WONDERFUL NEWS ~ YOU ALL MUST BE SO HAPPY!!

[mdurette Senior Member Find all posts View Profile Close mdurette]

Guess I will put my 2 cents in - Loan Officer by day - vacation planner/dreamer by night!

Yes, as an industry we are not lending like we were over the past couple of years. But.....IMO, that is good. There was alot of crazy lending going on - giving credit cards, home equities, mortgages to people that really were not financially sound.

I see people almost everyday that have over $50,000 in credit card debt - it doesn't shock me anymore. The average person - if they added up all their "available credit lines" definately has more than $50,000 available to them. Let's face it - that is WAY too much. So, the credit card companies are starting to cut them down - because with unemployment numbers running high (and forcasting for higher ones) people will start to use their cards for expenses and start to pile on the debt which is very hard to get rid of once it is there.

As for home equity line of credits - yes, banks are shutting them down to. But, from what I have seen so far it is only on LOCs that had high Loan to Values to begin with. 3 years ago a house might have been worth $350,000. A homeowner might have had a $250,000 first mortgage and then added a $100,000 LOC. Well now - that hous might only be worth $300,000. The bank needs to cut that line down - because if it is drawn on in full - the homeowner will be completely upside down. (this is done alot now. A consumer can't sell their house - they use up all the equity line to buy another house - then let the original go into foreclosure). This way they get the new house before their credit is ruined.

Please know......as an industry we are still lending! But not crazily anymore...and that is a good thing.