Marc's Mortgage Matter's

The easy money that led Americans to depend on credit cards to pay their bills is starting to dry up. After fostering the explosive growth of consumer debt in recent years, financial companies are reducing the credit limits on cards held by millions of Americans, often without warning.

Banks that issue cards like Visa and Master Card, as well as the American Express Company, are cutting the limits for customers, who have run up big debts, live in areas that have been hit hard by the housing crisis or work for themselves in troubled industries.

After inadvertently hitting her credit limit a few months ago and then falling behind on a mortgage payment one of many customers had her limit lowered by American Express to $900 from $2300. She says this has never happened to her in 20 years. I would have advised to never use more then half of your credit line to stay away from a variety of issues, let alone go over your limit. Few know that once you do that, the credit card companies often raise the interest rate way over 20%.

Another executive and a realty firm in Las Vegas, said American Express had just recently reduced the credit limits on several personal and business cards virtually at the same time.

Such moves like lowering limits without you knowing can cause a consumers credit score to drop, forcing the person to pay higher interest rates and making it harder to obtain new loans.

Big banks face intense pressure on their balance sheets as they bring on billions of dollar worth of complex mortgage-related investments and other loans they are struggling to sell. Meanwhile they are bracing for a surge in credit card losses as the job market and economy falter.

Since borrowers typically run up their balances before they stop paying, issuers have started cutting lines of credit. Often, lenders will lower customers' credit limits as they pay down their debt - a technique known in the industry as "chasing the balance". This way, they are on the hook for less money if borrowers default.

For two or three years it was, "we are going to give you more credit, more credit, and more credit" Now in the last year it has been the exact opposite. Lenders are sending fewer offers in the mail, and borrowers already in debt, once courted by card companies are being shunned. For me at least that's less waste saved from all those pesty pre-approved credit cards and stuff we've been deluged with over the last many years.

Customers with stronger credit histories however have probably noticed few changes. But card issuers are also becoming pickier about whom they approve.

One of my old mortgage buddies claims his business is really down so he's trying other avenues;