The credit industry is in the midst of a financial storm and while battening down the hatches might keep the elements at bay for now, another impeding storm is on the horizon. Barack Obama's new credit laws have already sent shockwaves through the credit industry and with further laws about to be unleashed it seems that the once serene landscape for the credit companies is about to become a lot more cloudy.
The new laws restrict the credit companies from making profits in the same way as before, which why they are now trying their best to cut as much waste away as possible.In the past lenders have lured potential customers with low interest rates and no annual fees that's about to change, however, and companies are now scrambling to find ways to cut their credit lines.
Many companies are now embarking on a mass detox program, purging all inactive accounts in an effort to reduce their liabilities.Experts predict that in the coming months 20% or $1.2 trillion worth of credit will be cut and by the end of 2010 that figure is set to rise to $2.7 trillion or 50%.
It's not just inactive accounts that are going to be cut; borrowers who are deemed "subprime" could see their credit lines disappear, as could those weak credit and switch lenders.This recent information highlights the precarious nature of the industry and the vulnerability of the credit card companies. For those who potentially face having their credit limits revoked, these are worrying times and another sign that money lenders are adopting a much more ruthless stance towards both current borrowers and prospective clients. Making sure you don't fall into the red zone and that you maintain a good credit history is now more crucial than ever because one too many mistakes and you could find your credit line cut.
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