Is it true people are being denied access to bank accounts and credit?

[luckyorwhat]

Heard on late night radio while driving, that people with good credit are being denied large purchases on their cards, and some banks are restricting ATM withdrawals below what the normal max is.

Is this true? Does it depend on the bank, and what % of banks?

[Jamisjockey]

Oh Noes!! My faith in the banking industry!!

[Brad Johnson]

Of course some people are being denied large purchases on their cards.  It's called "maxed out".

Brad

[Zardozimo Oprah Bannedalas]

Yes, CC's get orders denied even when there's plenty of credit behind it. Happened when I moved to Dallas a few years back. Card that never got much use was used to purchase a few hundred dollars' worth of stuff late at night, two hundred miles or so from normal purchasing area. CC people said 'no'. Turned out that they thought it was stolen. Profuse apologies.

[Sergeant Bob]

Late night radio? Which late night radio program you are referring to?

That could explain a lot.

[El Tejon]

I heard that there are underground cities in Indiana too.  Darn that Art Bell!

[Sergeant Bob]

I heard that there are underground cities in Indiana too.  Darn that Art Bell!

Yeah, that and the "Kokomo Hum".

[grislyatoms]

Geez, guys. First post and he's made out to be AlexBellChickenJonesLittleArt.

Anyway, as for the topic, I have heard lately that banks are tightening lending terms due to all the doom and gloom forecasts and of course the mortgage uh, can't think of an appropriate term here snafu situation.

I've heard no other such rumblings, nor have I experienced them.

[Bogie]

You know, I think a lot of the mortgage stuff could get fixed if the loan holders just agreed to take the terms back to what they were initially... At the same time, requiring that the individual's credit be FROZEN (except for valid emergency) so that all they can do is pay stuff off...
 

[grislyatoms]

I think a lot of the mortgage stuff could get fixed if the loan holders just agreed to take the terms back to what they were initially

I think that's being done already by some finance companies.

[Perd Hapley]

If it is true, it is probably my fault.  And I'd do it again, I tell you! 

[grislyatoms]

If it is true, it is probably my fault.  And I'd do it again, I tell you! 

There you go.

[K Frame]

OK....

First, back off on the guy. He's asking for information, NOT spouting conspiracy.

Nice welcome wagon, you 'tards. 


Second, some banks/financial companies routinely look at the credit reports for people who have accounts with them. That's how you hear about people who have good credit ratings but a fair amount of debt getting hit with credit card rate increases. It's a pre-emptive strike.

I suspect that that may be what is happening here. It's all part of risk based lending.

As for withdrawal limits at ATMs, I've not heard that one. It could be that people are trying to get money out of machines that are not associated with their primary financial institution. The owner of the ATM may have different withdrawal limits.

[luckyorwhat]

OK thanks. I'm in Canada and it's hard to get a gauge on how things are down there. Our $ being above your $ in value is just good fun for most people, but it's got alarm bells going off in some people who are modestly familiar with investing. The US is supposed to be like Gibraltar, so if I hear other rumors I'll have to check here still to confirm.

The gist of that radio show was that the credit situation, liquidity crunch, (though swears are more appropriate) was so bad that in essence banks were freezing accounts, like often happens in very dire times. Even if untrue if I were American I'd consider getting cash from bank accounts as step 1, and then perhaps converting it to fungible commodities as step 2 if and when banks stopped letting people access their accounts.

[The Rabbi]

Actually the wall st journal had an article about banks yanking people's home equity lines because the value of the house had fallen, thus no equity anymore.
That isn't a conspiracy.  No one has a "right" to credit that is being "denied."  That is probably a sound judgement call on the banks' part.

[lee n. field]

Card that never got much use was used to purchase a few hundred dollars' worth of stuff late at night, two hundred miles or so from normal purchasing area. CC people said 'no'. Turned out that they thought it was stolen. Profuse apologies.

A couple months ago a card I use all the time (NRA Visa) was used to attempt to make a $600 purchase, at 4AM.  In the Netherlands.  The CC company refused it, and contacted me the next day.

[luckyorwhat]

Thanks Rabbi, that sounds like a reasonable, though still disconcerting, explanation of how such rumors get started.

As for traveling, CC companies prefer if you notify them you'll be traveling so their computers don't flag your card, so that's more of a personal mistake than a national financial one.

[luckyorwhat]

P.S. bogie someone has to lose money, your solution simply shifts the loss from one party to the other. Make no mistake, banks protect themselves and if it comes down to them losing, it's likely everyone loses with them. Technically the consumers are acting exactly right, it's the people who toyed with rates that made the mess.

You know, I think a lot of the mortgage stuff could get fixed if the loan holders just agreed to take the terms back to what they were initially... At the same time, requiring that the individual's credit be FROZEN (except for valid emergency) so that all they can do is pay stuff off...

[Zardozimo Oprah Bannedalas]

$600 purchase, at 4AM.  In the Netherlands.

That'll teach you to pay for hookers with a credit card. 

[drewtam]

As for withdrawal limits at ATMs, I've not heard that one. It could be that people are trying to get money out of machines that are not associated with their primary financial institution. The owner of the ATM may have different withdrawal limits.

I use chase, and they only permit ~$500 in atm withdrawal per day. Of course, in person banking has no limit. Also, that was 2-3yrs ago when I was still paying rent - so this is nothing new.

[wmenorr67]

You know it is interesting that everyone is spouting doom and gloom.  However, over here in Iraq I went to the Harley dealer and looked into a bike and found out that the one I wanted is sold out.  Granted the bike I was looking at is a limited edition bike but still at $16,, that ain't chump change.

[Bogie]

Well, it'll get spread out, but at the same time, I think that the folks who were unethically hard selling folks need to take some of the blame... And I also think that the buyers need to be financially shut down until they get the stuff fixed.
 
Drop the terms back to Day 1, and put all the credit cards in a safe, with a "do not issue" order at the credit bureaus.
 

[luckyorwhat]

Interesting, but the guy who was hard-selling people was Greenspan, when you make money cheap like that people buy more of it. Also the loans are not held by the banks anymore, banks bundle up a bunch of loans and sell them to the highest bidder, so a bidder buys those loans just like we buy savings bonds. If the rate of your bond was suddenly reduced so you'd make less off it, even lose money, that wouldn't be just.

[The Rabbi]

The gov't needs to do nothing.  The markets will clear all this at some price.  Some people will lose a lot of money.  Many people will lose some money.  Other people will make a ton of money picking the corpses for incredible deals.  That's how it's supposed to work.

[doc2rn]

This was hashed out on THR back in January around the first of the year. Yes, some CC issued by certain banks are refusing to accomodate firearm purchases.