Consumers May See 45% Cut in Available Credit

Lower credit-card limits are coming just as job losses soar
By Jim O'Neill,  Newser User
Posted Dec 1, 2008 6:00 AM CST
Signs for American Express, Master Card and Visa credit cards are shown on a New York store's door. Banks are tightening up further on credit cards.   (AP Photo/Mark Lennihan, File)
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(Newser) – Americans already struggling with tight credit are in for another blow: banks may cut available credit card lines up to 45% over the next 18 months, reducing available credit by some $2 trillion, reports Reuters. Home equity and credit card limits already are lower than in the second quarter, an Oppenheimer and Co. analyst says, calling it a “dangerous and unprecedented” trend in an economy that’s seeing large jobs losses.

The five biggest players in mortgages and credit cards are all pulling back liquidity, she says, making reductions in consumer liquidity unavoidable.