Apparently many of the major credit card companies have recently begun reducing the available credit limits for many consumers, even if they have always paid on time.
Bill McClary, Spokesman for ClearPoint Credit Counseling Solutions, gave a very clear answer to a question posed by a consumer as to why this is happening. An excerpt is below.
“All credit card companies use risk models to determine how much interest you pay and how much credit they will extend to you. Your situation is typical of what we are seeing with other consumers in this difficult economy. The reason that creditors are increasing interest rates and lowering credit limits is because their risk models are changing based on patterns they are seeing with consumer activity, credit scores and recent changes in income levels of cardholders.”
I understand that credit card companies have a business to run, and that they also have a responsibility to the stock holders to run a responsible business.
On the other hand, what if I used the same line of reasoning at home?
Let’s say my son does all of his homework. He goes to school everyday, and he gets good grades. His classmates, however, fail the class and don’t do their homework.
Using the same rule that the credit card companies are using, I should send my kid to his room with no supper, and ground him for a week………….
Kevin McGrath - Broker/Owner
RE/MAX BRAVO
www.fredva.com
Licensed in the State of Virginia
