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Re: Credit Limit Cuts

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jaybird201
Established Contributor

Re: Credit Limit Cuts

Just had an analyst from Visa come and give us a presentation today, during which I thought he revealed some interesting data on credit limit cuts:

 

-Over the past 12 months, available credit has been reduced by 10%

-92% of this reduction was for dormant accounts

 

He went to to explain why this was a smart business practice because when people are in financial trouble and max out their current cards, they tend to pull unused cards out of their drawers and tap these limits. He had plenty of data to back up these assertions.

 

Just thought this might give a different perspective on this issue, which has been debated frequently on these forums.

Message 1 of 5
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Anonymous
Not applicable

Re: Credit Limit Cuts


@jaybird201 wrote:

Over the past 12 months, available credit has been reduced by 10%

-92% of this reduction was for dormant accounts


Hey Jaybird,

Do you think the stat of 92% of CLD was from dormant accts?Im still new to the Fico game but that # seems rather high to me....

Message 2 of 5
jaybird201
Established Contributor

Re: Credit Limit Cuts

Do I think that statistic is correct?

 

Well let's see, Visa's senior vice president of strategic and economic analysis said it and presented the data that helped him come to that conclusion. So yes, I think that statistic is correct.

Message 3 of 5
Anonymous
Not applicable

Re: Credit Limit Cuts


@jaybird201 wrote:

Just had an analyst from Visa come and give us a presentation today, during which I thought he revealed some interesting data on credit limit cuts:

 

-Over the past 12 months, available credit has been reduced by 10%

-92% of this reduction was for dormant accounts

 

He went to to explain why this was a smart business practice because when people are in financial trouble and max out their current cards, they tend to pull unused cards out of their drawers and tap these limits. He had plenty of data to back up these assertions.

 

Just thought this might give a different perspective on this issue, which has been debated frequently on these forums.


Are these stats for all US-issued credit cards(Visa, MC, Amex, Discover) or VISA-only?

If it did include Amex then I would have expected a much higher percentage of reduction and much lower percentage of reduction for dormant accounts.

Message Edited by refskuska on 05-26-2009 08:29 PM
Message 4 of 5
jaybird201
Established Contributor

Re: Credit Limit Cuts


@Anonymous wrote:

@jaybird201 wrote:

Just had an analyst from Visa come and give us a presentation today, during which I thought he revealed some interesting data on credit limit cuts:

 

-Over the past 12 months, available credit has been reduced by 10%

-92% of this reduction was for dormant accounts

 

He went to to explain why this was a smart business practice because when people are in financial trouble and max out their current cards, they tend to pull unused cards out of their drawers and tap these limits. He had plenty of data to back up these assertions.

 

Just thought this might give a different perspective on this issue, which has been debated frequently on these forums.


Are these stats for all US-issued credit cards(Visa, MC, Amex, Discover) or VISA-only?

If it did include Amex then I would have expected a much higher percentage of reduction and much lower percentage of reduction for dormant accounts.

Message Edited by refskuska on 05-26-2009 08:29 PM

 I'm fairly sure he was talking about all US-issued credit cards (none of the other figures were Visa-specific), though I'm still trying to get my hand on a copy of the presentation.
 
@Anonymous yeah, I know AmEx decreased credit limits on something like 50% (I may be pulling that out of my @#%) of cardholders recently, but they don't have a significant share of the credit card market:
 

U.S. market share ranked by transaction processor, based on credit card receivables outstanding:
1. Visa -- 46 percent
2. Mastercard -- 36 percent

3. American Express -- 12 percent
4. Discover Card -- 6 percent

(Source: Nilson Report, May 2008)

 

Receivables outstanding aren't credit limit, but I think there's probably a correlation between the two? Maybe, maybe not. Either way, I feel like American Express focuses on charge cards rather than credit cards, and that they probably have such a small share of the revolving credit market that CLDs on their credit cards wouldn't make that much of a dent in the total amount of available revolving credit.

Message Edited by jaybird201 on 05-27-2009 09:20 AM
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