Credit Card Cancellations Pose Problems During Credit Crisis
CNN reports that the inability of individuals to access other types of credit - such as home equity loans - is forcing an increase in credit card debt during today’s tough economic times as people use credit cards to pay the day to day bills. The article talks about the problem with concern only about the debt that is piling up, but there is a bigger problem behind the curtain.
What is scary about this scenario is not so much the ultimate cost of goods but the prospect that a credit card company could cancel credit cards that sit as a consumer’s safety net - as described in this Wall Street Journal article. It speculates that credit card issuers may increase cancellation of credit cards because of credit card reform proposals and the credit crisis. Although it provides some tips to avoid the cancel letter, it seems problematic that consumers that are using an available credit line in an emergency might lose access to it - and be unable to find it from other sources.
Perhaps this is an issue that Congress should take up as it considers current Congressional proposals for credit card reform.
