So I used to have a fairly large credit line with bank of america which I do not use that much. However, when I used it I used to pay off regularly. Even as recently as two months back BAC used to send me a sheaf of (fee free) balance transfer checks begging me to use it. This weekend several things changed.
1. They updated their terms to increase the transaction fee on several cash type transactions. 2. They have added a 4% BT transaction fee/
3. Also they reduced my credit line based on lame reason like "based on past usage and history". What crock. Two things come to my mind. EITHER Bank of America is being smart and will become a better bank. Or they are going down the drain in terms of the money they have to do business and are adopting drastic measures like these.
I mean, we heard publicly that they need 30-34 bill more. Do they need more behind the smoke and mirrors? Also if they got some so much TARPmoney, why are they reducing lending lines?
Me thinks I will look at the technicals and then go short on BAC very soon.
That's been happening to people across all banks, they are reducing their exposure to a type of debt that has been higher in risk the past few months, so even if you are a good credit card holder but have limited activity, they might have lumped your acount in with the group to have limits reduced based on the amount of money available on your card. Since the whole industry is adopting similar measures, its really not a death nail indicator.
I am sure you have read that many banks are doing the same. For a simple reason. The less credit line available to customers, the less money they need as capital. If they allow you to have $100 in credit line, even if you use only $10 most of the time, they have to make sure that at least $100 is always available in case you go on a buying spree and use all of it. And they don't make any money on the amount between $10 and $100 still available.
After such a credit bubble we have experienced, they have no choice but to reduce all their credit line to customers to avoid another meltdown we have seen in the past.
Good post bro... although I keep wondering if the phony money they are propping up the bankstocks with - IS ENOUGH to keep the bank stocks floating high for 4-6-8 months?
It scares me, Im in FAZ and I think we all should be in the money ALREADY! The manipulation is disgusting. However, if the administration continues to pummel the bond market, they can give the banks billions and billions and billions (of our grandkids money) and ... let the banks defy gravity forever.
Makes me sick, but is this what is best for the poor and lower middle class??? Obama thinks so. I'm unqualified to answer that... but I'm f---in smart enough to ASK!