Over the weekend, a group of us were talking about the targets of these recent credit-limit reductions and interest-rate hikes. Who is being targeted? Bad customers only? Good customers? Everyone? I think it’s across the board. No one is being spared. The industry showered too much credit on everyone. The industry is now pulling it back in. In yesterday’s Miami Herald, Bankrate.com’s Greg McBride echoed my sentiments. From the story:Greg McBride, a senior financial analyst at Bankrate.com, is skeptical of the industry’s claims — although there is no way to say for sure because companies guard information about accounts closely.”I think a reasonable person could figure it’s probably more than the industry is letting on,” he said. ”We’re not just talking about distressed consumers anymore. We’re talking about people with great credit histories and low balances being blindsided.” Ultimately, he said, it may hurt the companies.”They’re alienating the same customers that they’re going to want back two years down the road,” McBride said.Not so long ago, helping borrowers rack up debt was a good thing. Credit card companies benefited when cardholders charged their original purchases and accumulated interest. They flooded consumers’ mailboxes with offers to sign up for new cards.Now, with unemployment at 8.1 percent and card company profits plunging, the industry wants to stop, or a least slow, consumers from building up such big balances. They’re concerned customers may never be able to pay off the mountain of debt. Published reports say card companies have already written off billions in credit card loans customers haven’t been able to pay.
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