Hot Tip Of The Week

Banks Are Pulling Credit Lines

Banks are getting 'holy' and will only lend to the most creditworthy and the best 'A' kind of deals.

Las Vegas lenders are systematically canceling unused credit lines - to free up cash ... we thought:

Same in Canada ... unused credit lines have been cut or sharply reduced.

One of our clients tells us that a credit line he had for some 15 years in the amount of $2.6 million - but had not used in the last year - was cut back to $500,000 without reason - by letter (!).

The reason is clear, whether it is the TD Canada Trust pulling its commercial credit lines or the Royal Bank "freezing its whole commercial book", or the Bank of Montreal and the HSBC getting out of the mortgage broker business, banks are getting very nervous and hanging onto their 'scared' cash.

Major Point:

- If YOU have an unused credit line ... and expect to need to use it down the road ... get the money now.

- Even your residential open credit lines (not the registered ones, like a matrix mortgage) may get pulled or cut back.

- Right now, your bank may be looking at you. If you are a small business or a company or an individual ... really, really think it through ... and act now.

It will get worse before it gets better.

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