Card Issuers Choke U.S. Businesses With Rate Hikes, Limit Cuts

[Joanne98]

Susan Woodward isn’t renewing the lease on her music boutique and internet cafe in Jackson Hole, Wyoming, after nine years. The reason: doubling interest rates on her credit cards.

“My business is seasonal, so we count on credit to stock the store at the end of the slow season and prepare for the busy season,” said Woodward, who canceled her Citibank and Capital One credit cards in February after learning that rates would climb to 19 percent from 10 percent. She said she always made timely payments and kept low balances.

Almost three-quarters of U.S. companies with fewer than 500 employees are experiencing a deterioration in credit or credit- card terms at a time when half of them depend on credit cards as a primary source of financing, according to a December survey by the National Small Business Association, a trade group with more than 150,000 members.

The increase in credit-card costs has forced some business owners to stop using their cards, and at the same time declining credit limits are cutting their access to cash, said Todd McCracken, president of the Washington-based NSBA. Twenty-eight percent of small businesses surveyed by the NSBA said they had their card limits or lines of credit lowered in the second half of 2008.

Bank loans are drying up as an estimated 70 percent of U.S. banks have tightened standards for small-business loans, based on a Federal Reserve January survey of senior loan officers.

http://www.bloomberg.com/apps/news?pid=20601109&sid=ay7Kz2AAfc_0&refer=home

[ixion]

1. this is a prime example...

of what I was talking about here:

http://www.democraticunderground.com/discuss/duboard.php?az=show_mesg&forum=114&topic_id=60649&mesg_id=60649

The debt I have is business related equipment purchases, and was under control until they jacked interest rates.

[Joanne98]

2. Sorry. They did this to my aunt and she had to declare bankruptcy.

Don't wait to long if you have to because they will keep draining your resources.

[ixion]

3. Sorry to hear about your aunt, Joanne... and thanks.

hopefully it won't come to that.

My dad lost his environmental consulting firm in the Reagan Recession. I'm hoping I can avoid the same fate during the Bush Depression.