As banks are hit hard by the the financial crisis, they become more stingy with their credit card offers. In many cases, they’re cutting the lines of existing customers and increasing their rates.

The American Chronicle reports:

“Today, rates for more than half of all cardholders have skyrocketed while interest rates are at their lowest levels in history. At the same time, mostly for very little reasons, credit limits keep being cut…

If you have a low-rate card, you will likely be “blackmailed” into choosing an increased 5% payment or a higher rate at your current payment. Card issuers want to get rid of you and your low rate. If possible, take the higher payment and keep the cool rate.”

HELOC borrowers have faced some of the same problems in the form of line reductions. But, in general, HELOC lenders are not able to change the terms of the line through raising the minimum payment.

Many people who already  have a HELOC are choosing to stick with it, and are sometimes withdrawing funds early to protect against line cuts. But, if you’re still looking for a way to borrow money, you may want to take out a home equity loan rather than a HELOC (home equity line of credit) or another type of loan. Home equity loans tend to have higher fees than HELOCs, but borrowers are safe from unexpected linen cuts.

See Also:

Home Equity Loan vs. Home Equity Line of Credit

Is a HELOC Right for You?

Tags | credit cards, Heloc, home equity line of credit, home equity loan