The Current Financial Market: Is the Credit Crunch a Credit Crisis?
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by: Stebee
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Word Count: 389
With all eyes on Wall Street, it is hard to look past the current financial state and see any type of bright future. News reports continue to tell sad tales of long-standing financial pillars falling under the pressure of an unstable market, as the DOW reaches record lows. It may be hard for the common consumer to clearly understand what all of the news reports mean for them. According to WalletPop.com, some credit card companies are cutting credit limits for consumers. "American express recently cut the credit limit for 10% of its cardholders", the financial website states. Consumers are quickly learning that even with near-perfect credit their spending limits are liable to being cut.
It is recommended that anyone planning to make big purchases or use their credit card for unplanned expenses should double-check their credit limit before taking any type of action. Even those who are completely |debt free are at risk of having their limits slashed. Checking whether this has happened before making any big purchases on your card may help you avoid incurring any type of penalties for going over the limit. If you have weak credit, loans are a bit more difficult to obtain.
Banks, in an effort to protect their own interest, are tightening their criteria. Consumers can only expect the constraints to get tighter if the financial crisis continues to get worse. Even if you are willing to pay higher interest rates to offset less then perfect credit, banks are still a bit more weary than in years past. There is one bright side to the current state of financial affairs. Banks still need to stay in business, and to do so they need to continue to make money. One way for banks to continue to keep standing is to accept good financial risks. Consumers with good credit may still expect to get good deals on home equity lines of credit and some businesses have found short-term loans pretty easy to find. With whispers of a financial bailout plan, banks are willing to lend short-term money to businesses, considering such an endeavor to be less risky. With a lot of assets and a good credit history, consumers and businesses alike can continue to get loans as banks try to find ways to keep a steady stream of revenue.
About the Author
The current financial "crisis" has brought a great deal of questions and concern from consumers. However, as consumers try to save, cut back, and become debt free, they can expect banks and credit card companies to behave in the same manner. It appears that everyone is trying to ride the wave until they can safely reach the shore.
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