By now, you might have read that some credit card banks are scrutinizing the spending patterns of their customers and lowering credit limits based on where and how a customer is shopping.

In one scenario, I can imagine a bank looking at a person charging a few hundred dollars at a divorce attorney’s office and assume that the customer’s marriage is in trouble and the credit lines need to be pulled.

In another scenario, I can imagine a bank looking at a person charging a few bucks for resume or placement services and assume that the person is unemployed and pull credit lines.

The real damage however is consumer over-reaction to these policies that force credit card users to simply stop using their cards for fear of lowered credit lines which result in lower credit scores which in turn sets another cycle of lowered credit limits or increase in APR’s in a vicious downward spiral.

The net result is more damage to an already fragile economy as consumers stop spending for fear of having their credit scores decimated.

I’ve been a critic of Dave Ramsey a few times on my blog and I vowed not to speak of him again BUT I am beginning to come around to his world view on credit cards.   The credit scoring industry simply wields too much convoluted power in the grand scheme of things and at this point, the banks & credit scoring philosophy is damaging consumption and the economy.

Credit card banks and credit scoring agencies are completely powerless when consumers pay with cash.   There is no record or “trace” of where, how, when, and why consumers are shopping and that may be part of what we need to get this economy going again: fearless consumers.