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Last week I wrote that banks were really starting to limit the origination of new consumer loans and credit cards.  This week we are hearing that more and more existing customers are getting their credit lines and credit card limits reduced.   A story broadcast on Yahoo has some more information.  See http://www.yahoo.com/s/996641.  You really need to be aware of this so you don’t go over your credit limit.  Exceeding your credit limit puts you in a position where you think you are financing something only to find out you need to pay cash for it at the end of the month.  This can also result in higher interest rates, as well as adversely affecting your credit score. 

Do not assume you will be notified first.  I am personally aware of instances where customers were notified after the credit line and credit card limit were cut.  Also, do not assume that your credit card transaction will not be authorized if it goes over your limit.  Many cards allow you to exceed your limit as long as you pay down the card upon receipt of your statement.  Further, do not assume you will be unaffected because you have good credit and pay on time.

Basically, banks are trying to limit the amount of credit they have outstanding to their customers.  So they are cutting back everywhere on all types of credit products.  The first wave of this started 6 months ago when lenders started cutting back and freezing home equity credit lines.  They were cut severely and swiftly without regard to credit history or original loan to value ratios.  Lenders were highly motivated to do this by the rise in foreclosures.  Small and large businesses have seen similar treatment due to the downturn in sales.  Now it is really starting to kick-in for the consumer.  The recent unemployment numbers foretell massive defaults on consumer loans and credit cards.  Banks are therefore very motivated, so expect swift cuts.

Personally, I would approach larger purchases this way.  Pay cash or don’t buy.  If you absolutely need to purchase on credit, make sure the financing is available.  It may not be tomorrow.

The deals at the stores today may get much better as the holiday season progresses.  In recent days we have seen major banks cutting back on credit card issuance and consumer loans.  We are not naming names here, but it is absolutely happening.  Both of these types of credit fuel consumer spending.  The consequences of these cutbacks likely include even more of a drop in consumer spending going forward.  My opinion, look for even bigger deals in the weeks ahead as stores need to unload inventory.

As was noted the other day, conforming mortgage loans have seen a dramatic drop in rates.  The underwriting is still tight, but those with good credit and steady employment should be able to take advantage of the historically low rates.  These loans may be the best Black Friday Deals around for those needing to refinance or wanting to buy a home.

Here are some low interest rate credit cards currently being offered.  (This chart should automatically update with current rates.)  As of today, you can get zero percent (0%) interest from 6 months to a year on some cards.

In case you missed it last month.  Quicken Online is now a free service.  This online version of Quicken is yet another solution that allows you to move away from your desktop and make your life easier.  And the price is definitely right.

Quicken Online allows you to manage your personal finances from any computer or even your mobile phone.  You can view your accounts all at once – Checking, Savings, Credit Cards.  You can track your money, get bill reminders and use their tools to help control your spending.  Probably a good idea just time for the holidays.  It seems fairly easy to use.  If you tend to get late fees by missing payments, you should definitely use this to help save yourself some money.

I would expect Quicken to add even more features because of the competition they are getting from Mint.com, which is another good solution for managing your money online.

Looking to cut expenses by transfering balances to lower interest credit cards, here is a chart with some of the best card offers.

If you have a business, check out some of these business cards. They can help your business in two ways. They have low interest start rates to finance purchases or cut your credit costs in these trying time. And many offer rewards programs or rebate programs that can help trim expenses. (This chart should continually update to feature the best business credit cards.  The chart information may be different than at the time of this post.)