In recent months, many people have found that credit card companies have, without notice, reduced  their credit lines to whatever their balance was plus a few hundred dollars. This has especially been the case with companies that are struggling in the midst of the credit crisis.

Generally, the credit card companies have a legitimate reason, of sorts, to do this action. Either the person missed a payment, or their balances are high across the board, etc. Nevertheless, many credit card companies seem to be overreacting and essentially scaring away a lot of their business.

I’ve personally had a few companies reduce my credit line, often by ridiculous amounts. Needless to say, those companies have lost my business.

Not only are the strong banks, Chase and Wells Fargo, eating their competitors, like Bank of America, alive in this whole mess, the weaker banks seem to be positioning themselves for future failure. By overreacting and destroying people’s credit lines, they only encourage people to move towards the stronger banks.

This mess will take years to play out, but when it does, the banks that took an appropriate amount of risk will benefit. The banks that were too leveraged and then overreacted too much (cough cough Bank of America) will be left in ruins.