Champ Money

The fed has announced plans (another $800,000,000,000) to help “unfreeze” credit – such as credit cards, student loans, and auto loans.

The first question should be, wasn’t the first $700,000,000,000 bailout supposed to unfreeze the credit?

Instead, the major banks and lenders “hid” the money in less risky ventures – none of which actually helps the economy.

Keep your eyes on this as it unfolds, but don’t assume it will be a good thing. We do need readily available credit for consumers, but the question remains – will this latest funding become available to consumers? And, if it does, how many of them will just end up in the exact same situation that got us into this mess to begin with — with easy credit?

Following the subprime mortgage meltdown, many banks and credit card issuers, including American Express, have been decreasing credit limits on the accounts of their cardholders.

This is understandable, as the creditors have been burned by customers defaulting on loans and credit accounts. Although, it might seem unfair to some who end up with a lower credit limit, despite their perfect credit history.

Some companies are casting the wide net across their customers and reducing most limits to some extent. Others are being more selective.

While this might seem painful to some cardholders in the short-term, tighter limits on credit will lead to a stronger economy in the long-term.