More on the Credit Crunch...
I jut spoke with a dear friend of mine whom I've known for over 14 years. He is a lawyer, financially responsible, makes an excellent income and is conservative in his spending habits. He makes it a point to save money and also contribute to his 401K each month. His credit rating is impeccable. He has one credit card that is paid in full, on time, at the end of each billing cycle. Yesterday he received a call from this credit card company. They told him that they are reevaluating his line of credit and are freezing the account until they can determine whether or not he is worthy of a continued line of credit.
He, being the responsible person that he is, has no other credit cards. Therefore, it's not as if his creditor is worried that he has too much accessible credit.
If this is happening to someone with a credit history like his, what about the people who use their credit cards as a lifeline? That is to say, what about the people who have no choice but to use their credit cards for staples such as gas, groceries, and utility payments?
Time for a plan B.
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ADDENDUM: I keep meaning to mention this but it continues to slip my mind. The Wall Street Journal had an article in it yesterday about credit card usage. I didn't feel that it was terribly informative and certainly not alarming so it was hardly worth a mention in my posts. One "fact" that they did mention gave me a lot of food for thought. They mention that we, as consumers, really haven't tapped into all our available credit (the exact quote is "Consumers aren't close to maxing out their cards") meaning that we are "fine" because we are not maxing out our credit cards. I beg to differ. Husband and I have two credit cards: one that we use (and pay off) regularly and one that we have in case of emergency. I can't remember the exact credit limit of the combined cards but suffice to say that it's somewhere in the neighborhood of $70,000. Let me just tell you now that if we ran up that much debt we would be bankrupt in a matter of months just trying to meet the minimum payment. That's a fact. Okay, it's not really a fact, it's a guess. I haven't done the math. But, knowing our budget, there isn't much wiggle room in there for additional payments of any kind so let's say it's an educated guess. What on earth is going on here?!?!?
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2 comments:
wow, you know, i hadn't thought about that happening (the 'freezing' of accounts for reevaluation)... i only have one credit card. i pay it off monthly too and use it mainly to get points. frightening to think that it could be frozen also.
unfortunately, whats happening is that everyone is running scared. so they (banks, cc companies, mortagage companies, etc) are pulling back, hoping to save themselves the embarrassment of having to be 'bailed out'. but, what's going to happen is a domino effect where CC are frozen, then ppl can't pay, then bills are defaulted on, people go homeless....it's horrible. i'm not the panicky type, but i feel like i should go get all my $$ out of the bank and shove it into my mattress just to be safe.
scary scary times.
That's crazy. I just have a credit card I use to buy text books each semester (blinking text books, the biggest scam ever!) and a debit card I use for everything else. This is all too crazy, that someone with an impeccable credit rating is having issues with the credit world is a sign of the times. They say the small banks are safe bets for saving your money because they don't take big risks like the banks we've been hearing about on the news, so don't go stuffing money in your mattress melek, I'm sure thieves are thinking about that now when they break into houses! Boyfriend and I were laughing one day when we drove by a Wachovia and a random guy was standing outside with his handmade sign saying "DEPOSITORS BEWARE!" So, if we haven't heard of the bank in the news, it's probably safe.
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