Why Are We Getting Less Credit Card Offers in the Mail?

Credit card companies are now putting the vice grip on the heads of good paying customers since many of their other “subprime” borrowers are defaulting in mass. Keep in mind these are the borrowers they so heavily recruited during the bubble. As this interesting article explains:

Banks are holding over $2 trillion in excess reserves. This is taxpayer money funded through the Federal Reserve and U.S. Treasury. What this actually tells us is that banks are gearing up for more internal problems like the $3.5 trillion implosion of the commercial real estate market or rising defaults. Currently banks have made massive profits by gambling with taxpayer money in the stock markets. The spigot to the consumer is nowhere to be found.

The article goes on to explain further that:

Credit card debt is contracting at its fastest pace since the Great Depression. In fact, over $17 billion in consumer credit was yanked from the market last month.

This presents a problem to the responsible consumer because:

Credit card companies are now putting the vice grip on the heads of good paying customers since many of their other “subprime” borrowers are defaulting in mass. Keep in mind these are the borrowers they so heavily recruited during the bubble.

My brother and I both have a the same type of credit card and just dealt with them raising rates. He complained about it, but to no avail. So now both of us carry only a small balance on the card.

And when consumers have less credit available to them, it can hurt their credit rating.

The troubling issue as well is that by closing accounts down debt ratios shoot up and impact credit scores. So by closing down an account, a prudent move on the surface, may actually hurt your overall credit score. And FICO scores carry a lot of weight and unjustifiably so.

So we're all suffering one way or another with the bad economy. I understand why banks are being prudent and why credit is drying up. I just wish this was done sooner before everything was ground to a halt. After all, we're talking about an industry that once gave a cat a $4000 line of credit!