Consumers’ access to credit could get even tighter as creditors continue to slash consumer credit lines and move to close inactive credit accounts – defensive measures meant to protect banks against the surging number of consumer defaults, reports The Wall Street Journal (”Credit Card Companies Slash Credit Limits,” Jan. 5, 2009).

Banks are closing these inactive accounts in an effort to minimize the risk of having financially-strapped consumers who, in a worsening economy with already limited credit options, may choose to run up balances on long-unused credit cards that still have available credit.

J.P. Morgan Chase is lowering the credit limits of customers who the bank perceives to be “risky,” and Bank of America is “closing accounts with zero balances that have been inactive for more than a year and may adjust customers’ credit lines up or down” based on “their risk profile and performance,” a Bank of America spokeswoman told The Wall Street Journal.

American Express Co., US Bancorp, Washington Mutual Inc., and Wells Fargo & Co. are also reducing the credit limits of cardholders who carry high balances or who’ve made late payments, according to a July credit card survey by Consumer Action, a national consumer education and advocacy group.

In all, about 20 percent of banks have reduced credit limits on the existing credit cards of prime borrowers, and 60 percent of banks have lowered limits for nonprime borrowers, according to a Federal Reserve survey of senior loan officers from October.

With lower credit lines and less access to credit, consumers could see their credit scores drop and may find it harder to get a loan.

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