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Banks boil my blood!

I gotta vent! It’s time this bank crap came to an end.These very institutions that greedily dug themselves into a high risk mortgage hole that’s now caving in around them are now choosing to use “guilt by association” as a tool for determining creditworthiness in the name of reducing their “risks.”

It’s believed that credit cardholders are seeing their card limits reduced because of where they live, where they shop and even who holds their mortgage. According to Bill Hardekopf of LowCards.com, it’s becoming obvious that banks are looking for excuses to lower cardholder credit limits.

As reported on MSNBC.com, Hardekopf explains it this way: What issuers do is tighten up standards of how they analyze risk. Card agreements don’t allow credit card issuers to simply close accounts and demand full payment. So, they can lower credit limits repeatedly to prevent a consumer from making any new purchases. It does the same thing as closing the account.

Lowering the credit limits is a simple way for the card issuer to reduce risk. They do not reveal these strategies publicly, of course, so it's never immediately obvious what's happening. But Hardekopf believes efforts have systematically begun to reduce some users' credit limits. They’re akin to what he says was a “quiet change” earlier this year that saw card interest rates mysteriously rise!

This isn’t wild speculation by Hardekopf, either. According to the CNBC report, Bank of America was asked if it is using new criteria to lower credit limits. Spokeswoman Betty Reiss said, "We adjust credit card limits based on the individual cardholder's risk profile and performance with us." She declined to answer additional questions. And at least one Washington, D.C. American Express cardholder was told in a letter his limit was being reduced, in part, because of where he shops and who holds his mortgage.

Now, it’s not just that I find the bank’s “guilt by association” policy another abysmal way to respond to a credit debacle they created for themselves. And, it’s not just that these banks now look to the taxpayers (who are also us credit cardholders) for a bail out. No, in truth, I have serious concerns for dealers (in fact for all small businessmen) who may use credit cards for short-term funding of their business operations.

Apparently, if we shop in the wrong stores, live in the wrong places and have a mortgage from the wrong lenders, we may be elevated to a higher risk category and see our limits reduced. It sucks, but be warned it is happening.

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