In the past several months, we have seen what we thought to be impossible actually begin to happen. Century-old institutions such as banks, brokers, automakers, and retailers crumbled and fell at a rate that matched the Great Depression.
Americans that had taken on lopsided mortgages and home equity loans that past few years began to lose their homes and other possessions such as leased automobiles and office space due to missed payments. Credit has begun to dry up and Americans are going to be faced with some hard decisions in the next two or three years.
Most of us have gotten used to credit and all of its advantages. Now we are seeing how the disadvantages work. Whenever there was a need for an emergency expenditure or a frivolous one, credit cards were at the ready to handle the load. Soon, that option will dissipate as well.
Soon, Americans will not have the latitude to overspend because credit card companies are beginning to get stringent with credit limits and cash advances. If you want to maintain your good credit standing, you're going to have to start paying down your balances first.
One of the frivolous expenditures I mentioned are tickets to sporting events. Almost everyone uses credit cards to buy their tickets—especially since most ticket purchases are made offsite—through the mail or the Internet.
Many season ticket holders will need to have enough free space on their cards to make these outrageous payments. Going forward, fewer Americans will have the luxury of those $5-10k credit limits.
This has not occurred en force as of just yet, but it is coming. The upcoming NFL Playoffs and the the 2009 baseball season will be the first test. When Joe Fan goes to pay $3,800.00 for his Seattle Mariners season tickets this winter, he may find that his credit-card limit has been slashed to the point where he can't make that purchase any longer.
When Giants fans send it their playoff vouchers in December, how many ticket holders will not have the sufficient credit limits on their cards to complete the voucher?
Good questions. I have impeccable credit. I pay my bills on time every month. Yet, American Express has felt the need to cut my credit limit in half. MasterCard reduced me by 20 percent and Visa by 10 percent. I called these institutions and aired my dissatisfaction.
They all said they could reduce credit limits at their discretion at any time without any agreement being violated. In the end I didn't really care, because I see credit cards as a vice anyway, but if they did it to me, they can do it to anyone.
That means sports teams might not be getting those season-ticket plans filled so easily as in the past. I suggest if you are planning to make a large purchase in the near future, make sure you check with your credit card company beforehand.
The moral of the story—if there is one—is that the Yankees, Mets, Giants, and Jets will all moving into new stadiums in the next 20 months. Their ticket prices are outrageous—although many have already committed to purchasing seats.
This may not go well for these teams because that expendable NY area cash has dried up. I predict either lots of empty seats in these new venues—or lots of frozen dinners in NY homes—or both...