Credit Card Company
As credit card profiling, credit limit reductions and interest rate hikes weren’t enough there is an even greater more dangerous tactic that creditors are using causing a snow ball like effect that’s hitting even the most pristine credit worthy consumers.
By 2010 there is an estimate that there will be $2 trillion less in credit limit availability in the marketplace or 40%.
Recently there was a video on CBS about Miriam Majors, a young woman who had her credit limits reduced because of credit card profiling and as a result the ‘balance chasing’ tactic that creditors are also using created a snow ball effect of problems for Miriam.
What is ‘balance chasing’?
If a creditor sees that another creditor has reduced your credit limits therefore increasing your debt to credit limit ratios than this is what triggers the second creditor to issue an interest rate hike.
Here’s what happened to Miriam Majors:
The Snowball Effect
- Her credit card’s (creditor #1) credit limit was reduced by $7,000
- Her FICO score went from 783 down to 733 (50 point reduction)
- Her other credit card company (Bank of America #2 creditor) raised her interest rate from 7.9% to 28.99%!
- Her monthly payment increased with creditor #2 because of the interest rate hike
- She spent her personal time to find out why this happened with Bank of America
- No comment from Bank of America just policy because her limits and personal credit ratings changed
Watch the CBS News video on this story below!
Her solution:
- She canceled her credit card account with Bank of America
- She opened a new credit card account with her credit union
Don’t think for a minute that your 750 or 780 credit score is immune to what’s going on in the credit card industry. As you can see that one creditor that decides to reduce your credit limit can trigger a snow ball or domino like effect on your credit and finances and leave you powerless to defend it.
Miriam Majors did take action but unfortunately the damage is done and even though her credit score is within prime rate qualification the time, frustration and money it cost to her is something that will stick with her for life.
Remember - Anytime you suffer a setback or disappointment, put your head down and plow ahead. ~ Les Brown
To Your Success!
Marco Carbajo
About the Author
Marco Carbajo is a business credit specialist, author, speaker, and founder of the Business Credit Insiders Circle. He is a weekly columnist for Dun & Bradstreet Small Business Solutions, a business credit blogger for All Business & American Express Small Business and author of “Eight Steps to Ultimate Business Credit” and “How to Build Business Credit with No Personal Guarantee.” His articles and blogs have also been featured in Business Week, The Washington Post, The San Francisco Tribune, Scotsman Guide, Alltop, Entrepreneur Connect, and Active Rain.
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July 16th, 2009 at 7:11 pm
Hi all
I like Your site. It is interesting. Do You have RSS I would add to my favorites.
Let me know when it will be ready. Kee it UP.
see ya Szczecin Hotele
July 16th, 2009 at 9:16 pm
Thanks for the feedback Szczecin! My rss feed url is http://www.businesscreditblogger.com/feed/
All the best!
Marco
August 19th, 2009 at 12:46 am
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Thank you
Nadine
September 18th, 2009 at 1:16 pm
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November 29th, 2009 at 5:43 pm
Thank you for the feedback!
December 20th, 2009 at 12:01 am
Hi, I can’t understand how to add your site in my rss reader. Can you Help me, please
December 29th, 2009 at 8:07 am
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December 31st, 2009 at 10:48 am
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January 16th, 2010 at 9:42 pm
Yup, you hit the nail right on its head and told it as it is. Keep up the great posts. BTW, getting into a large amount of debt is a nightmare and I learned it the hard way. I’ve since then almost paid up all of my debt though and wrote about it at http://HowToGetRidOfCreditCardDebt.org
January 17th, 2010 at 11:37 am
Thank you for the feedback Carroll and congratulations on becoming debt free!
April 13th, 2010 at 5:32 pm
This is a exceptional post, but I was wondering how do I suscribe to the RSS feed?
April 13th, 2010 at 6:39 pm
Click on the RSS feed button at the top right of the page.
All the best,
Marco
April 16th, 2010 at 4:33 am
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April 16th, 2010 at 6:18 am
Thank you Hilma! Hopefully with the new credit laws now in effect there won’t be so much abuse but I would really like to see them cover business credit cards as well.
All the best,
Marco
April 18th, 2010 at 3:51 am
I care about your site very much. Will bookmark it. Keep up to great work on it. Thank you!
April 18th, 2010 at 9:26 am
Your welcome Bethan! Appreciate the feedback
April 20th, 2010 at 12:09 pm
This is a good article, I was wondering if I could use this piece of writing on my website, I will link it back to your website though. If this is a problem please let me know and I will take it down right away.
April 20th, 2010 at 2:33 pm
No problem Vince! Thanks for the plug and appreciate the feedback.
All the best,
Marco
April 21st, 2010 at 10:26 am
This is a good write-up, I was wondering if I could use this article on my website, I will link it back to your website though. If this is a problem please let me know and I will take it down right away.
April 21st, 2010 at 1:22 pm
No problem Alyssa! Appreciate the comment.
April 23rd, 2010 at 12:13 am
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May 22nd, 2010 at 2:33 am
Hi Marco, just wanted to respond. I thoroughly loved your post. Keep up the great work.
May 22nd, 2010 at 12:27 pm
Thank you for the positive feedback!
July 22nd, 2010 at 12:56 am
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July 25th, 2010 at 11:16 am
Thanks for the feedback!
All the best,
Marco