@adelphi_sky wrote:I look at it this way. A bank knows what its risk exposure is at all times. Also, it is SUPPOSED to have enough cash on hand to cover a certain amount of defaults. I think that is in the Dodd/Frank act or something. Banks need to learn how not to assume too much risk it can't cover.
The problem people have is, after these banks extend so much credit on the front end, and then they want to cut it on the back end. Which means the banks overextended themselves on offering credit. Bad business.
Here is a fantasyland example. HOw about banks extend only enough credit up front that falls within a safe risk profile to where if there were mass default, they have the cash to cover. So, when there is a rise in unemplyment, credit limits stay the same and accounts remain open. Banks can even deny new apps and CL increases for the short term. So, if a bank exposed itself to $50bln in credit, it has $50bln to cover. Now of course not everyone will default. So, they could have maybe $25bln to cover defaults. Nothing more, nothing less. It's almost like checking. Banks have to have enough cash to cover mass withdrawls of cash if necessary.
Yet, in the real world, banks don't ave to manage risk at all. They just slash and crash customers' credit lines at will causing uncertainty and unecessary stress on the customer.
I blame the banks. Don't offer me something and tie me to a contract to where I can't change the terms but you can without a moments notice. That's bad business. Yes, we sign those contracts. But we should and can demand more from banks through Congress. But Americans are fat and happy. They give us crumbs and we say it is the greatest thing in the world. People need to start getting mad and really make impacts instead of just bending over.
People in other countries outright riot if they feel their government is not protecting them sufficiently. WE're simply not angry enough to change legislation.
I would like a law that says if I am in good standing with a creditor, they can't close my account or reduce my credit line without my consent. Right now, they can adversly affect our credit profile and we have no power against it. And good standing can mean having at least a 36 month hstory with the bank with no late payments. At least that gives good long-standing customers some protections.
There are a few problems with this.
Up thread someone called it out but to reiterate, if there's any pattern in the recent Sync closures as an example, it's people who had large lines that they simply were not using. Here's an idea, don't pick up junk tradelines for limit padding, it wasn't needed.
Someone suggested that I and others if our accounts were slashed, we'd change our tune: no, frankly I would not be surprised AT ALL, if every other lender not named Chase went and whacked my accounts. 99.99% of my transactions fall to Chase cards for the last 3 years, that is a fact. Amex if they whacked me, I'd sideeye it a little but wouldn't worry about it my guess is they won't though as I carry a couple of AF's (Zync, Hilton) and they do get used occasionally... though I certainly don't need 30K on that Hilton card, go ahead and CLD it, actually I might go do that pre-emptively, have to think about that as the CSR is getting the swipes anyway these days.
Finally the proposed law? OK sure, but it'd kill the subprime and near prime markets that Synchrony et al. typically play in... we can't manage our risk, OK, we won't give you credit, or certainly not the outsized CL's we've come to enjoy... go straight back to 1980 and do not pass go. It's really that simple for market economics.
I really don't understand the whole issue, if you don't need the limits and don't use them, don't expect that the lender algorithms won't see this and adjust your account accordingly: nobody, and I mean nobody from a credit perspective, needs that 40K store card from someplace they never shop at.
Actually there are maybe 4-5 people that I can recall on this forum that actually have the personal expenditures needed to really utilize a 40K tradeline... my CSR is above 40K and I suspect my high balance on it is like 7K. That really sounds like I'd be just fine with a 10-20K CL at most.
