I just recently read of another example of a well-intended attempt to help us help ourselves in the midst of this cranky, fragile economic climate. Credit card companies are slashing credit limits.

 

This, you see, will keep us from spending more than we can ever hope to pay off, right?  Visa wants to help us set appropriate budgetary boundaries. Thank you Discover and MasterCard too. (Now please quit sending me an average of eighty two new card offers daily and save a couple of thousand trees already.)

 

The problem with the credit limit thing is that they are doing it on cards that are already open, and apparently they don’t have to get your approval to do it. It can happen and you might not even realize it if you’re just floating a balance and making minimum payments. Maybe it won’t impact your spending – you’re not putting anything new on that card anyway – but it CAN have a big fat negative impact on your world in another way.

 

Let’s say you have a $4k balance on a card with a $15k limit. That actually looks pretty good to those FICO folks who do the credit ratings because you’re not maxing out. But say your credit card company decides in your best interest and theirs to slice your approved credit amount to $4,500. Suddenly that $4k balance doesn’t look so prudent, and guess who’s going to take big fat notice?!

 

In this market, credit is hard enough to come by. Keep a proactive eye on your credit scores now so you won’t be in for a rude surprise once you finally have enough equity back in your home to consider a home equity loan to pay off those “maxed out” credit cards!