Word is that as much as $2 trillion in credit lines may be cut over the next year and a half. Between worries over the recession, concerns about defaults and new regulation in response to the credit market crisis, companies may be pulling back. Reuters reports on the pullback by the credit card industry:
A consolidated U.S. lending market that is pulling back on credit is also posing a risk to the overall consumer liquidity, Whitney said.
Mortgages and credit cards are now dominated by five players who are all pulling back liquidity, making reductions in consumer liquidity seem unavoidable, she said.
Companies like Citi are already planning on boosting interest rates, and some companies have already reduced credit lines on some customers. You better double check: Your $3,000 credit line may now only be $2,700.
Of course, this pullback may not be a bad thing. Despite TARP’s best efforts to keep us spending with the help of debt, the card companies cutting us off might be for the better. After all, we as a society have become waaaaay too dependent on debt. Perhaps it’s time to re-examine our values and our habits and start avoiding debt.