I don't know if that is so strange Leanan.

I think you explained the reasoning quite clearly one post up - the credit card companies are cutting credit lines based on "the industry the card holder works in, where they shop, what they buy...etc"

Maybe the CC companies are screening the population of card (bag)holders based on their sources of income and buying habits for a good reason.

That reason being, source of income and buying habits likely determine which card(bag) holders will become extinct next.

It seems strange they would cut off one of their best customers that way.

Part of the new regulations that just went into effect include more data sharing between various cc companies - and who knows what else. Perhaps this newly married customer who charges $90k per year is a wee bit too risky for some other reason.

cfm in Gray, ME

Very interesting counterpoint. Thanks!

FWIW...the new regulations wouldn't let them raise interest rates on existing balances, unless they were more than 30 days late.

.... the truth is that some people do need large credit balances - small business owners, for example, or someone trying (if anyone still is) to build a house.

And therein lies the answer to why the banks and credit card Capones cut credit to ''good'' customers. They simply can no longer afford to have so many people have so much outstanding credit, even if they pay it back at the end of the month. The numbers get too large. It's not just that one guy, there's millions of people like him. If 10 million people at one given company have $7000 outstanding basically continously, the company has to find financing and insurance for $70 billion at any given time, all the time. They simply don't have the collateral, and they can't take (re: pay for) the risk.

This is, among other things, what the term "credit crunch" means. It's not about the client paying back or not, though the risk factor increases hugely, and so does the insurance, whatever form it may take. It now comes down to the cold hard numbers in the morning: what do you have, what are you owed, and what are the chances you'll get that back?

Come January, this will be true for business throughout the economy, and the consequences will be disastrous. Everything runs on credit, nobody owns enough to do without. This has always been a great system for banks until now, they have worked hard to establish it. Imagine, every penny spent carries an interest rate owed to you, including all the money the government issues.

The new regulations will make credit availability worse, until credit is there only for who doesn't need it, and of course that has already been discounted in all sorts of rates. I say good riddance, because although people are used to credit, making loan shark operations an essential part of your economy is a process that cannot possibly end well. That said, expect the largest credit card companies to apply for bank holding company status when push come to shove. I think Amex already has?!

The end of credit will be a hard lesson, though. Think Clint Eastwood. Pay first, talk later. Lines of credit, letters of credit, they are disappearing so fast it's scary, and they are the sole lubricant of our economies.

What if you lose your job and your credit at the same time like a lot of other people? How would you buy food with no credit? Pay medical bills, car expenses, utilities.

I have money saved away. I'd have to be unemployed for about 3 years before I run out. So, I'm golden... But, I am unlike the 90+% of the population... Yeah, too many people have lived hand-to-mouth for too long (even going so far as to leverage themselves to the moon) and this is causing a lot of issues...

When I was much younger, but still not young, I remember that after I first got my job at a very big oil co, I applied for a credit card. No! Had to be there a year. Couldn't get a mortgage, had to change banks -- no credit history. By the time my kids were teenagers, and didn't have a pot to pee in, except mine, they were getting credit card offers every week.

I go thru the roof when every 5 years or so something slips up and a payment is late and I have to pay a penalty. I hate credit cards and don't use them for credit -- I use them simply as a way of not carrying around a lot of cash. And when I first got one, it was because you needed it to rent a car. I didn't have one then.

Credit cards don't solve the problem of losing jobs. They make it worse, even though one resorts to them if there's no choice.

The solution to losing jobs is, individually, savings, and societally to guarantee a job to everyone willing to work. What can't and shouldn't be guaranteed is high standard of living -- but the basics should be. The idea that the billionaires have worked for their money is becoming laughable. There needs to be steep progressive taxation, estates too, so that there is a net for people. Millions of people don't hit the bread lines because there's a sudden epidemic of laziness. The bailout money is totally misdirected.

AMEX is a real PITA to their merchants too. I know!

They cannot go bankrupt fast enough for me.

Pete