Wall Street gets a bailout, regular old Americans see their available credit decrease, their interest rate go up, and their rewards get smaller…
Big lenders “” like American Express, Bank of America, Citigroup and even the retailer Target “” have begun tightening standards for applicants and are culling their portfolios of the riskiest customers. Capital One, another big issuer, for example, has aggressively shut down inactive accounts and reduced customer credit lines by 4.5 percent in the second quarter from the previous period, according to regulatory filings.
Now, I cannot say that this is necessarily a bad thing in the long run; but right now with people getting laid off, grocery prices skyrocketing, and small businesses trying to make ends meet, is it a good or a bad thing to cut off credit so quickly? The credit industry needs to be tightened up, for sure, but taking away credit from perfectly reasonable people who have always paid their bills on time seems a bit much.
Banks are slowly removing balance transfer offers (here are some 0% balance transfers still available), giving away cheaper rewards, reducing credit lines, upping interest rates by 2 or 3 percentage points, and shutting down inactive accounts. What I don’t understand is why we are “loaning” our tax dollars to these companies and then getting our needed credit shut off in return. They will surely take our money; guess they don’t want to loan it back.