Credit Card Limits Cut, Accounts Closed: Industry May Cut $2 Trillion Off Lines

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By Jess Snow Dec 2, 2008

Will your credit card limits be cut and will you face an interest rate hike? A report from the Boston Globe paints a gloomy picture for the credit card industry and cites an analyst that believes the industry will reduce lending by more than $2 trillion over the next 18 months. Oppenheimer & Co.'s Meredith Whitney speculates that lenders are bracing for the upcoming defaults and making moves to limit the damage.

The analyst believes it will take about eighteen months to come to fruition but the cuts will be steep. If she is right with her analysis it might be a final shock for some families that use their credit card like a bank and only pay the minimum payment each month, relaying on that credit for bills and other necessities.

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An earlier study by noted that in the last decade savings are down while credit card debt is up. That's a recipe for disaster and is part of the credit crunch problem. "For the past 10 years, American consumers have been taking on more debt while their savings and real wages have declined," the report states, according to the Times-Tribune.

"Consumers’ access to new credit could be drying up." If that is the case and the claim valid it will certainly change the lives of many American families that carry loads of debt on credit cards. Will credit card companies take the types of steps predicted by the analyst?

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