[quote] my interest is mainly do credit card companies actually have any idea what the risk really is in the current economy? I’m sure they have all kinds of neat mathematical models based on how things have gone in the past, but I’m wondering whether any of it means a dman now. Maybe they’re just freaking out and cutting limits. But the solution to reducing risk isn’t just to cut everyone’s limit. heck they could cut risk to zero and just close all the accounts. the accounts only have value when they’re open. I have a feeling that the credit card companies actually have no freaking idea whatsoever what the relative risk is on each cardholder. and they are going to get .creamed because of it. i.m not sure risk is knowable in the current environment.[/quote]
You just answered your own question. You are 1 of millions of people who have credit cards, of course they use mathematical models to predict risk. Credit card companies don’t set your limit based on your assets they don’t know your financial situation. Credit card default is happening and will continue to worsen so the credit card companies are cutting risk.
