Banks get more selective with credit card offers

In the wake of the subprime mortgage mess, the banks have had an epiphany: lending money to people who won't be able to pay it back isn't such a great idea after all. I hereby award them the prestigious No Kidding! Award For Finally Figuring Out Something That Should Have Been Patently Obvious a Long Time Ago.

According to the Wall Street Journal, (subscription required) "Big card issuers such as Citigroup Inc. are requiring higher credit scores before issuing new cards. Some lenders, including Bank of America Corp., are offering lower initial credit lines. Other lenders, such as Capital One Financial Corp., are limiting credit-line increases or reducing credit lines for existing customers if they see signs that they are suddenly applying for more credit or are having trouble paying down their balances. And many card issuers are raising late fees and other charges to help offset what they see as higher risk."

In the long run, this is probably good news for consumers. For too long, banks have been in the business of offering people just enough rope to hang themselves, allowing uninformed or irresponsible borrowers to spend money they don't have, then hitting them with interest rates so high that it becomes nearly impossible to get out of debt.

In the meantime, this will cause some hardship as people who had been relying on plastic to cover their expenses may find themselves suddenly denied -- It could also hurt retailers as people are forced to cut back on their spending.

If your credit card got canceled, take the hint and get your financial house in order. Start with Dave Ramsey's amazing book Total Money Makeover -- But buy it used or take it out of the library.