Report Says Banks to Slash Credit Card Limits by $2 Trillion

No more charge it now when you don't got it?

Credit card companies may slash credit limits on credit cards by $2 trillion dollars.

Whitney, an analyst and managing director at Oppenheimer & Co. who predicted the current financial-services industry meltdown, now says credit-card issuers will eliminate more than $2 trillion in available credit over the next 18 months.

I'm not sure if they can lower credit limits when one has already used it, but for all of those who are losing their jobs and probably credit cards will be the last option, this is not good news.

Specific to the credit-card industry, we believe that well over $2 trillion of lines will be pulled over the next 18 months, the result of risk aversion and funding challenges, but also regulatory and accounting changes

The severe consequence of this cannot be overstated. While just over 70% of U.S. households have credit cards, over 90% of those households revolve credit at some point during the year, or in other words use credit card lines as a cash management vehicle.

Pulling credit at a time when job losses are increasing by over 50% year on year in most key states is a dangerous and unprecedented combination, in our view.

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