WTVM.com and WTVM News Leader 9, Columbus, GA | Credit Card Crisis

Credit Card Crisis

NATIONAL - First we had the mortgage crisis. Now it's the credit card industry's turn.

If you depend on credit cards...and so many of us do...take this story as a warning, because the rules are about to change. Even if you're not using them any differently than you have for years, your credit cards could now end up draining you.

You're used to getting them. Offer after offer for credit cards, and sky-high credit loans...they are what made living beyond our means so easy. But now credit card companies are yanking those offers back at a time when so many of us depend on them for increasingly expensive basics like groceries.

Big credit card companies like Bank of America, Citigroup, and even the retailer Target are seriously tightening their standards. If you've been late with a few payments they could cancel your accounts, and some are raising your rates...even those of you with good credit scores aren't immune. American Express says it'll hike interest rates for some by two or three percentage points. And they cater to upscale cardholders.

The credit card industry is doing all this because lenders wrote off about $21 billion in bad credit card loans in just the first half of 2008, as more borrowers defaulted on their payments. With more and more faltering companies laying off workers, analysts say the industry now stands to lose at least another $55 billion next year.

It's about to become very hard to get a card.

Lenders are shunning customers already in debt, and most of us are. They're being especially strict with people who live in areas hurt by the housing crisis or who work in troubled industries, and that's two hits for us around here.

there's the other thing that's important to understand.

Having to wean yourself off credit cards isn't the only problem.

When lenders make changes to them, if they reduce your credit line for, example, your credit score suffers, forcing you to pay higher interest rates, and making it harder to obtain loans.

Seems like its time to start re-thinking our addiction.