Ongoing financial crisis sees a cut in credit limits

Posted 2007-11-20

It is said that due to the current ongoing financial crisis around the world, consumers are allowed to put only up to a certain amount on their credit card.

The Daily Telegraph reported that credit providers are cutting down the borrowing limits for consumers in spite of them having a decent and credible repayment records.

In fact Goldfish, a credit card provider affirmed that they indeed cut down the credit limit for some credit users.

This global crisis has been attributed to the downfall of the sub-prime mortgage sector in the US, which saw a number of not so rich householders not making their repayments on time.

What also became known was that a quite a few big financial organizations had bought a portion of these sub-prime debts and hence would see big losses with the sector’s downfall.

A consequence of this is that banks have raised their lending rates, in this credit crunch which is felt at all levels.

The future looks bleak, with the ongoing credit turbulence continuing and the behaviour of the global stock markets not helping in way. All this shows that this situation will continue as is for a while.

London’s  FTSE index experienced its most major fall out since August, when investment bank Goldman Sachs had foretold of huge losses for arch rivals Citigroup due to the sub-prime fallout.

Citigroup was highly involved in the US sub-prime market and due to this forecast, their share plummeted by 6% just yesterday.

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