09-07-2020, 08:00 PM
It's not uncommon during recessions for credit issuers to reduce credit limits, close accounts, raise rates, etc
During the last recession Citibank lowered my credit limit by about half and jacked my rate from 9.9% to 29.9%. I was insulted by their letter too because I had great credit and paid my balances every month. They had an option to "opt out" of the rate increase by closing my account, which I promptly did. I had a couple of credit card issuers close my accounts with the excuse that I hadn't used them in a long time, and a few others lowered my credit limit as well.
This time around a lot of lenders have taken other measures like no longer offering HELOCs, and most of the ones that do have terms so unfavorable you wouldn't want one anyway.
But other than that, I don't expect the mass credit tightening we saw the last time around because the FED eliminated the reserve requirements for the banks so that they would have less incentive to tighten credit or start foreclosures, but they are still going to take some measures.
During the last recession Citibank lowered my credit limit by about half and jacked my rate from 9.9% to 29.9%. I was insulted by their letter too because I had great credit and paid my balances every month. They had an option to "opt out" of the rate increase by closing my account, which I promptly did. I had a couple of credit card issuers close my accounts with the excuse that I hadn't used them in a long time, and a few others lowered my credit limit as well.
This time around a lot of lenders have taken other measures like no longer offering HELOCs, and most of the ones that do have terms so unfavorable you wouldn't want one anyway.
But other than that, I don't expect the mass credit tightening we saw the last time around because the FED eliminated the reserve requirements for the banks so that they would have less incentive to tighten credit or start foreclosures, but they are still going to take some measures.