CLARKONOMICS: Our Consumer Action Center has been getting tons of calls from people complaining about big run-ups in interest rates on their credit cards and their lines of credit being greatly reduced.
In fact, one call came from a listener who had her interest rate
raised to 58%! The old high we'd heard was around 40%.
Of course, this only affects you if you run a balance, which is around 70% of Americans. Banks used to
love customers who only made minimum payments every month. But now they're getting very nervous after seeing a trend of minimum payers going into default.
So the banks are punishing everybody. Even if your credit is solid and you pay your balance in full each month, there's a strong chance that your limit will be cut. Incidentally, new stats suggest that only 10% of Americans paid their bill in full
every single month during a 12-month period.
A top economist named Meredith Whitney predicts that credit limits will be shrunk globally by $2 trillion over the next year and a half. So follow
Clark's advice about dormant cards (aka "back of the wallets") so you're not left without any credit cards to use down the road.
