Over the past four months, I’ve been contacted by a lot of consumers who had their credit card limits decreased. Many of these consumers had their credit limits reduced to as little as $100 more than their current balance, putting them at risk of over the limit fees and penalties. And, while the old adage is adding insult to injury, the real issue here is adding injury to the insult of getting your credit limit decreased.
Overview
When a credit card company cuts your credit limit, this can have a huge, negative impact on your credit score. The reason lower credit limits can rapidly erode your credit score lay in the heavy weighting given to the utilization of available balances. For example, a person with $900 in credit card debt and a credit limit of $10,000 gets a credit score boost because they are using less than 10% of their available revolving credit. Even at 30%, your credit score isn’t negatively impacted. However, when a credit card company swoops in and cuts your limit to $1100, you are now using nearly 90% of your available credit. In other words, you’d be maxed out.
Things Are Getting Worse
The first people to get stung by credit limit reductions were those on the border of good to average credit. These consumers started getting hit soon after the collapse of Lehman Brothers in the fall of 2008. Now, however, we’re getting emails from customers who have good credit, always pay on time, and aren’t even close to maxed out. And the trend is getting worse.
A www.bloomberg.com article penned by Alexis Leondis contains this startling observation;
“About 45 percent of U.S. banks reduced credit limits for new or existing credit-card customers in the fourth quarter of 2008, according to a Federal Reserve January survey of senior loan officers. Financial institutions may slash $2 trillion in credit- card lines in the next 18 months, Meredith Whitney, a former Oppenheimer & Co. analyst, wrote in a Nov. 30 report. “
Based on a number of email and blog comments we’ve received, the timeline for these credit limit cuts has probably decreased from 18 months to today.
What You Can Do When Your Credit Limit is Decreased
1. Act Quickly: When you learn of a credit limit cut, especially one that puts you at or near your credit limit, you need to move very quickly or you risk falling prey to numerous traps. Here’s one example: Let’s say your limit gets cut to $100 more than your current balance, and you have an auto-payment set up for $101. When that goes through, you’ll not only go over your limit (and get hit with a fee) but also, you will have given the credit card company a legal and legitimate reason to raise your interest rate.
If you fall into this position, make a payment to your credit card online or by phone immediately and cancel any auto pays you have in place.
2. Apply for a New Credit Card: It takes a few weeks for changes by your credit card to hit your credit report. If you apply for a new credit card immediately, you may be able to get approved before your credit score decreases. This will not only give you access to credit, but it could also help your credit score, as you will now have more credit available to you (For information or to apply for a new credit card, you can compare offers in 0% APR credit card section of this website.)
3. Pay Down Your Credit Card Debt: While obviously easier said than done, paying down you debt will help limit the damage done to your credit score. However, there are a few things to be careful of. For example, if you think you will need this money in the near term, you’re better off holding on to it and worrying about your credit score later.
4. Monitor Your Credit Closely: If you’ve recently been clobbered with a credit limit decrease or another adverse credit event, you may want to check out your credit score. There are a number of websites that offer free credit monitoring trials for 30 days that provide you with access to all three of your credit reports and scores. These sites also have tools that enable you to estimate how certain events, such as getting a new credit card, will change your credit score.
Final Words
Unfortunately, all consumers are now at the mercy of our desperate banks. In the short term, its always best to plan for the worse. Today, that means staying on top of your credit card accounts, paying down debt, and vigilantly defending your credit score. Getting your credit limit cut in times like these is the last thing most of us need. However, smart, decisive action can help you avert the worse.
-Jeffrey Weber
To review credit card offers and free credit reports, please visit the main section of Smart Balance Transfers where you can compare offers and apply online.
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June 12th, 2009 at 10:28 am
Unfortunately, credit card companies are reducing credit limits so they can reduce their credit risk. The consequence of this is lower credit scores, which will ultimately allow the banks to charge us higher interest rates on mortgages, car loans, and other credit cards. Clearly, the banks stand to benefit twice-by reducing outstanding credit risk AND by charging us higher rates. Legal? 100%. Fair? Not even close.
Ultimately, opening up a new credit card with a new credit line is good line of defense, as it will soften the blow a lower credit limit will have on your credit score. Unfortunately, lower credit scores make it harder to get approved for new credit cards- this is a classic viscous cycle.
June 16th, 2009 at 5:40 am
My credit card had a limit of $2,500 with a balance of $13.86. I use the card only for iTunes purchases and pay it off monthly. I was shocked to receive a letter saying that my limit is being decreased to $1,000 due to “payments are low compared to balance owed” and “no mortgage loans.” I’m a graduate student earning about $11.00, who would give me a mortgage??? I have since closed the account- but I’m wondering, what will the effect be on my credit score?
June 16th, 2009 at 11:30 am
Kimberly,
Unfortunately, closing the account will probably have a negative impact on your credit score, especially if the account is your first and/or only credit card. Since the account is already closed, it is likely that there will be some damage to your credit score. However, opening a new credit card account with a different company may help offset the credit score decrease. The sooner you open a new account, the more likely you will be granted approval, as your credit score will not reflect the damage from the closed account until the other company updates your account.
Also, the reasons you state for the credit limit cut are completely absurd. Its as if too random reasons were pulled from a hat!
June 23rd, 2009 at 8:09 am
I agree with Denny. My husband and I had a Washington Mutual account that was of course taken over by Chase. It had a $9000 credit limit. We made two large purchases in March and maxed out the card. We just made a $5500 payment the other day and when I went in to make sure it had cleared I noticed our limit was lowered to $3700. We aren’t over the limit but we are very close now. I know I can’t close it because that has a negative affect on our credit. I guess we’ll go back to paying $200/month with interest.
July 3rd, 2009 at 12:40 am
I have a similar story to Cheryl and Rick. I had a WAMU card with a $9500 limit which was maxed and I had just paid it down to $5800, significantly improving my credit score. Chase just sent me a letter today saying they were cutting my $9500 credit limit to $6300!
On top of this they have been and still are charging me 30% APR!!! I called them and they said there was nothing they could do.
Chase are evil scum. The government gave them a sweetheart deal taking over WAMU and now they are screwing us. I was hoping to be able to refinance my mortgage and now thanks to the !@#$% bastards at Chase my credit score will suffer and I may be trapped in a subprime variable rate loan with interest rates set to soar.
July 10th, 2009 at 10:51 am
I have had the same problem with a WAMU card acquired by Chase. I had a $4600 limit with a $4000 balance. I just paid off $3700 of it in a month, and they decreased my limit to $2800 now. I have not yet received a letter from them, but I am pretty angry. I was apying 31.74% interest on the card, so paying it off made perfect sense, and paying off cards should increase my credit by decreasing my balance-to-limit ratio. It looks like WAMU/Chase is following suit and purposely trying to lower my credit by decreasing my limit. I hope they [expletive deleted].
July 13th, 2009 at 12:16 pm
I guess this is becoming a chase bitch fest, they just did that to me, I am trying to purchase a home. paid them off. balance of 1300 zero now. credit limit 2000, 1000 now, due to adverse items on my credit, while on the phone with them pulled from experian and found no adverse new items, score had even increased, 705, but i was told to wait for the letter they have sent out. dam this bill of rights for the people to help against the card companies can’t come any sooner. This unfair practice has to stop, they say the econmony is hurting This has to stop how is it supposed to get better if they keep dragging everything down. pay offyour debt, check, lower you credit limit, check, score goes down, check, I have found local credit union’s have the best rates right now.
August 12th, 2009 at 2:03 pm
I have to agree with Denny also. I have a Bank of America card that was originally limited to $40,000 (probably a little higher than it needed to be) it was reduced in January of 2009 to $14,400 at the time there was no balance and I was okay with the decrease. We began using he card for trips and various items and as we developed a balance our credit limit was decreased. I was a victim of identity theft and it showed derogitory crdit on my bureau because of that. I have everythin removed from all 3 bureaus now and today received a letter saying my limit was being decreased again. When I called to talk to somebody about it they claimed the reason for the recent decrease was 2 late payments from 43 months ago that were on my credit well before we got this card. As of today my average FICA score is 736 and this is still happening to me and there is nothing I can do about it. Seems a huge injustice is being done to the American people. Our society is continuelly being kicked while we are down. Bank of America received more Tarp money than any other bank and what did they do with the money??? How about buy Countrywide Home loans. Our tax dollars hard at work for us once again!!!
September 4th, 2009 at 9:39 pm
I think i have the best of the worse stories. in december 2008 i was told my credit interest rate was being raised on various accounts.DID HAVE 0% 1.99% 2.99 ETC. I have ALWAYS,ALWAYS paid on time and more than the minimum. I started the snowball plan to pay down my $37,000 in credit card debt.Each and every card I paid down by thousands of dollars the companys decrease my limits and as soon as I paid them OFF they closed my account. I have paid off over $25,000 since January (by taking on a second job) and my rates finally dropped to $500 limits and then closed by banks. I keep thinking i am getting close because the more I pay the greater my ratio will be -NOT!!! I owe now 13,000 on 3 cards and one of them just inforned me of a decrease after my $4,000 recent payment which should have brought me to the 20% range-but now I am at 98% of my limit-I can guarantee they will close it too. my credit score went from 760 to 549 while I was on my best behavior reducing my debt. My game now is who will be the last card standing because they alone will get my business for the rest of my life-AMEX-worse i went from 17.000 limit to 500 and then they closed me two days after my last payment,THE LESSON I HAVE LEARNED IS IT MAKES ME MAD TO LOOK AT OR USE THESE CARDS AND IN THE LONG RUN I WILL COME OUT AHEAD-DEBT FREE-USING CASH ONLY-THEY ALL LOST A VERY GOOD 100% PERFECT PAYING RECORD CUSTOMER-BYE,BYE TO THEM ALL-SO NOW I AM DOWN TO CITI AND CHASE -WHO WILL WIN MY LOYALTY AND BUSINESS-I POST AGAIN ONCE I PAY THEM-IT MAY BE NOONE IF THEY ALSO CLOSE ME DOWN-THEY BROUGHT ME IN WITH 1.99% RATES AND I TOOK THE BAIT AND NOW THERE WILL BE WHOLE COUNTRY OF RESPONSIBLE PAYERS WHO WILL LEAVE THE PLASTIC BEHIND AND BANKS WILL BE HURTING FOR THE STEADY CUSTOMERS-THEY WILL BE STUCK WITH THE BAD PAYERS OR THOSE WHO ONLY PAY THE CARDS OFF 100% EACH MONTH-WE WERE THE BACKBONE OF THEIR WEALTH-THEY MADE INTEREST ON ME AND I PAID ON TIME WITH EVERYTHING GOI I WILL BE DEBT FREE by the end of the year-IF I KEEP MY SECOND JOB MAYBE next year i can make another 37,000 and I CAN BUY A CAR WITH CASH since i won’t get a good car loan now I HAVE busted my butt and EARNED AN EXTRA 37,000 IN A RECESSION IN ORDER TO BE DEBT FREE-AND OUTSIDE OF A MORTGAGE I WILL STAY DEBT FREE SO WHO CARES ABOUT FICO NOW (I ALREADY HAVE THE MORTGAGE AT 5%) AND I NO LONGER SHOP EITHER -THIS ALSO HELPS ME OUT-IT CAN BE DONE -IT’S JUST REALLY HARD BUT I SEE THE LIGHT AT THE END OF THE TUNNEL AND I WILL BE THERE SOON-GOOD LUCK TO EVERYONE WHO HAS BEEN SCREWED LIKE ME-FICO ONLY A NUMBER YOU ARE #1-LETS RATE THE BANKS WITH A SIMILAR SYSTEM AMEX STARTED IT ALL FOR ME -THEY WOULD GET THE LOWEST SCORE
October 20th, 2009 at 6:51 pm
Has anyone considered a Class Action lawsuit against banks? Typically I am against lawsuits, however it is obvious they think they can damage a persons credit report without consequence. I personally was damaged as my credit score went down enough where I could not get a loan needed. They are obviously damaging consumers in mass.
October 21st, 2009 at 10:47 am
I am aware of at least one that was filed against Chase regarding the change of fixed rates to variable rates, but am unaware of more general ones filed against other companies. The unfortunate reality is that most credit card companies are engaging in unfair, though entirely legal tactics.
November 2nd, 2009 at 3:21 pm
I just activated my new card in Oct 09 that expired at the end of 09. Today, I got a notice that my credit limit of $38K was being lowered to $20K due to economic trends and due to the fact that I had sufficient credit. I owed a $0 balance but I am concerned with the impact this is going to have on my FICO score which is in the top 1%. I have another credit card with a $28K limit but I pay the balance every two weeks. I carry no credit card debt from month to month, just mortgage loans. Should I be concerned with this limit decrease.
November 3rd, 2009 at 2:37 pm
Gina,
In all likelihood this should not impact you negatively, as the decrease in your credit limit will not cause your debt to available credit to increase. If you wanted a general estimate, many free credit score products provide tools you can use to analyze the impact of a credit limit change to your credit score.
November 10th, 2009 at 2:17 pm
I just had $30,000 in credit limits across two cards cut to $13,000 yesterday. Both these cards are owned by Citi, and I have had each of them for more than 10 years and never made a late payment. This caused me to go from a little over 40% utilization to approximately 97% utilization.
So reading this I am guessing I need to get a new card before these limits hit the agencies, but is that really all we can do? Is there no way to avoid the screw job other than paying every card off with the possibility of having the companies close them and cancelling out any headway you have made by making payments?
November 10th, 2009 at 2:58 pm
Gus,
Unfortunately, getting a new credit card fast is the best and easiest way to prevent your score from taking a big hit. The other option is to pay off the debt, but most people are not in the position to do so immediately. You may want to consider getting a new card that offers 0% balance transfers, as this will help reduce your interest costs and stop the flow of money from your bank account to Citi’s.
November 16th, 2009 at 10:01 pm
Does any one know if a credit card company can decrease your credit line in a closed account by cardmember?
November 17th, 2009 at 10:36 am
Vladimir,
Credit card companies can decrease credit lines at any time for any reason. If you are concerned about having your credit line lowered, open up a apply for a new credit card to gain access to additional credit.
November 25th, 2009 at 2:07 pm
well supposly my creidt limit was decrease from a $5K to $1800 i just spoke to a rep manger and he reinstate that for me which it did report to the 3 beur which cost me over 20points, i’m just on way to dispute this with the three agency repairing my creidt score. becasue i still have 14 days grace period from the adverse letter which was sent out to me.
December 19th, 2009 at 7:29 am
It’s happening to everyone. Almost everyone has experienced lower credit card limits. The banks are doing this to survive the mess they caused themselves. Unfortunately the Government won’t allow them to fail, because that would have even more devastating consequences to the economy, let alone the credit card industry. Regardless, the Government, and the Obama administration should do something about the massive credit limit lowering and make it illegal and only based upon payment history critera, rather than the arbitrary critera banks are allowed to use currently. For that matter, credit scores should not be based upon lower limit to balance ratios, but instead only on how card holders handle paying the amount due on time.
December 21st, 2009 at 11:38 am
I agree Bryan, especially on the calculation of credit scores. In a normal environment, credit scores were effective. However, when random, unrelated and often unjustified credit limit decreases come into play, the cost of credit can skyrocket simply because credit reporting agencies don’t take larger economic events into consideration.
December 29th, 2009 at 9:12 am
I just had Chase Chase cut my two cards limits as well. I have no late payments and this is hurting my credit score. I think we are pretty much helpless here but I would suggest filing complaints with your state Attorney Generals. It may not do anything intially but if they get flooded eventually something will get done. Be proactive! Most state have an online form you can fill out in 5 minutes.
January 3rd, 2010 at 8:46 pm
Chase, gave me a $3,000 limit credit card in February 2008,then raised the credit limit to $4000 a few months later in August. I used about $2200 of the balance, paid on time and then paid off $2000 on the card in October 2009, which left a grand total balance on the card of about $230. On December 29th, I recieved a letter stating that my new limit was $1000. So in a nutshell my good payment history and low balance on the card meant nothing. They’ve decided to arbitrarily hurt my credit score by reducing my available credit. I intend to call them tomorrow, voice my grievance and immediately terminate the card. I have others, so maybe closing the account won’t hurt me too bad but I refuse to be held hostage by greedy,deceitful banks and credit card companies. I am intending to start using my local credit union for the bulk of my financial transactions. Screw Chase Bank. Any company, product or sevice that I find out is affiliated with Chase will never get another dime of my business, period.
January 5th, 2010 at 2:28 am
Same story here – Chase card, limit of 16k reduced to 11.5k, balance of 1.2, limit dropped again to 2.5. Suddenly, I would have difficulty even booking travel or handling an emergency situation now. Recieved note on Saturday that it was based on information from Equifax, where my rating is in the “excellent” arena.
My thought was to: a) complain to State authorities, checking out where best to go with this, and b). Quickly getting a new card or cards to bring my available credit back up and avoid score reduction.
My question is this: where is the best place to go? Local credit unions? One of the offers in the link referenced above? I’d like to go where it is most likely that I will be granted the $9k that was reduced, and where this is least likely to happen again (probably not with any of the big banks again). Do you have any advice regarding where it is most likely that I won’t go through a credit check, which will also hit my credit reports, and end up getting the most (highest line) for my application?
Thank you for the advice!
- Jim
January 5th, 2010 at 2:30 am
Oops, last comment I meant most likely that I will get the most for a. Credit check, not “won’t” – hopefully the intended comment was clear!
January 21st, 2010 at 4:16 pm
I have just got a letter from Capital One saying my credit limit has been decreased to nearly half, leaving me with $200 dollars play for any interest rates. They said they looks at my credit report and compared ALL my credit cards to come to this decision. My credit is great, work hard to make all my payments on time. Never go over my credit limit. I don’t remember reading a comment regarding Capital One so I posted this. I told them I will pay this off and close the account in the next month. I’m not understanding the logic and I bet anyone who actually works for these companies do not have the same issues as we do.
January 22nd, 2010 at 11:06 am
Tanya,
For a while it seemed credit limt cuts were slowing down. However, I anticipate many people will find themselves in the same position as you once the new credit card laws kick in. Since credit card companies won’t be able to raise your interest rates, they may resort to cutting off credit limits to force you to pay down your balance, which will have a lower rate. They can then increase your interest rate on new purchases, which is a loophole in the new law.
Just to be sure you didn’t miss any changes in your credit profile, you should use a free credit report service to check your scores and see if they are basing it on a change that you weren’t aware of, including a mistake.
January 28th, 2010 at 8:49 am
I found this site after getting my very own “We have recently reviewed your account history…” letters from Barclays and BofA. I too have always had excellent credit and paid on time. I’d like to share an idea that I learned about on Huffington Post.
It’s called Move Your Money (moveyourmoney.info). The basic premise is that we should ALL be taking our business from these greedy behemoths and instead banking with our local credit unions or community banks. They are the ones that did not need TARP and are best positioned to extend credit to us and our local businesses. The site has searchable lists of banks in your area.
The idea has received some coverage from the media but more people are embracing it every day.
I encourage you to check it out. I am on a mission to dump my Citi, Wells Fargo, BofA, Barclays and any other big name, Wall Street scum I can find in my wallet. Good luck!
January 28th, 2010 at 2:00 pm
Hilley,
There are a lot of pluses to using a credit union. I wrote yesterday about how credit unions can be helpful for people looking to repair bad credit, as they are more likely to treat their customers as human beings instead of numbers. Of course, there are benefits to banking with the larger institutions. Unfortunately, those seem to be disappearing every day.
Note: I disabled the link to moveyourmoney dot info because it was unverified by Norton safe web and I don’t publish links to sites that may pose risks to my readers. The site is linked from the Huffington Post, but for the time being, I have to protect the security of my visitors, so please use discrection before choosing to visit the website.
January 28th, 2010 at 11:59 pm
This information regarding Chase is very helpful. Consumers should ban together and dumb these greedy banks!
January 31st, 2010 at 3:32 pm
Chase reduced my credit line in 2009 then shortly after they decided to take me to some crazy variable rate APR. I opted out of the account and am continuing to make payments at the original (much lesser) APR.
Today, I got a recorded message from CitiBank telling me to call them immediately regarding my c/card account. When I called in, the recorded voice gave my balance (which sounded right) but then gave my available credit of $37!! I almost died. Thought someone had stolen my card info or something. Basically they just decided to reduce my credit line by many thousands of dollars for no good reason.
I suspect the new laws that come into effect on Feb 13th have something to do with this – that and the fact I’ve been on a special 0% APR with them (so they haven’t earned any money from me).
Essentially, I’ve never missed a payment in my life and as far as I know my credit score is up towards the perfect end.
When I called to find out what the deal was, I canceled my enrollment in credit protector which was costing me a good $50 a month. I had done the same with Chase last year. I don’t really need it and at least it made me feel like I got some form of revenge.
February 1st, 2010 at 11:37 am
Nick,
I’m more than a little worried by your comment. I think you nailed it on the head. This is likely because of the new credit card laws, and I’m afriad this is going to become a big trend.
If you need more available credit, I would recommend applying for a new credit card as soon as possible. When your decreased limit is posted to the credit bureaus, it will show that you are essentially maxed out on your Citi card. This increases your credit utilization ratio, which accounts for 30% of your credit score, and could cause other lenders to deny you credit if you need it as a safety net.
We list applications for 0% credit cards on the main part of our site (you can view offers here), but I don’t care where you apply. I’m not telling you this to drum up business. I’m telling you to get a new credit card as soon as possible because I believe it will be difficult for you to do so once you’re new limit hits your credit report.
Lastly, you may want to keep an eye on your credit score. We list free credit score offers on our site (you can view them here).
February 7th, 2010 at 12:00 pm
Thanks Balance Transfer Helper! I had been receiving stuff in the mail from Discover forever (maybe once every two days). Seemed like they really wanted my business and, after what Citi just did to me, they got it. I applied for the card 0% introductory offer and got it. Limit is quite low at $2,000 but at least it’s a third of what Citi just took away. I also applied for Compass Banks “Clear” offer – very low APR – still awaiting an answer on that one.
The bottom line is I have about $5,000-$6,000 currently readily available to pay off some c/card debt. I think I’ll utilize about $2,000 of this to pay off some debt (after Feb 22nd of course) and leave the rest in the bank for now until I get a feel for what’s happening.
I don’t want to pay off too much off one particular card in case they reduce my limit even more.
Once this all blows over and the economy is booming again and the banks are keen for the business again, I *WILL* definitely remember who screwed me over.
Also, let’s all not forget… whenever you deposit money into your bank account you are effectively *LOANING* your money to the bank!! So, if a particular bank has screwed you for no good reason, you might want to consider “loaning” your money to another bank (preferably a smaller local bank or credit union) that would appreciate your business more.
February 8th, 2010 at 9:31 am
Thanks for the kind words and good to hear you’re able to grab credit at good rates to make up for the credit limit cut.
You make a really good point about where we put our deposits. With interest rates so low, many of us are essentially giving the biggest banks interest free loans-and they’re using the money to lend to our friends and neighbors at 29.99%. Credit unions are really a good place for people who want to fight back against the banks that have hurt them.
February 12th, 2010 at 3:14 pm
I recently got a letter from Citibank on one of my 2 accounts, stating they are reducing my credit limit from $16,000 to $12,000 because their recent review of the account showed I “have been using a small portion of your available credit”.
I checked my credit scores before calling Citibank today and I am at 990 (SuperPrime).
When I called Citibank, I explained I use my card for business, that I need the higher limit, and that I am concerned about the lower limit affecting my perfect credit score. The manager said there was nothing she could do & that if I need more credit down the line, I could call then. I pay my card off monthly. Last year my average monthly balance was less than $1000, the year before that was $1 – $3000.
Interesting enough, my only other card is with Citibank and they have not yet reduced that limit. I have a $20,000 limit on it, with similar usage. I imagine that card limit will be lowered soon also!
…Any idea how this might affect my credit score?
Thanks!!
February 12th, 2010 at 4:21 pm
Debbie,
I’m not an expert on credit score issues, but I can provide you a knowledgeable assessment.
Based on the information you provided, it appears you carry a low end of statement monthly balance. Basically, if you had high balances that added up to 80% of your available credit, then a credit limit decrease would hurt. However, as long as your balances are low at the end of your statement periods, you will appear to be using a small percentage of your available credit. This will keep your credit utiliztion rate low, and since CUR accounts for 1/3 of your score, you may see little negative impact.
If you are extremely concerned, you may want to use a credit monitoring service for a few months to see if anything major happens. Otherwise, you may be one of the lucky few who won’t get their credit score hurt by a credit limit decrease.
February 16th, 2010 at 1:11 pm
I wish I would have read this blog an hour ago! I only have one credit card–a Home Depot card. I had a limit of $2300 but it got slashed to $1300 due to a couple of late payments. I am trying to improve my 625 credit score in hopes of getting approved for a first time homebuyer loan. I just received my tax return and paid down my credit card. I had a balance of $1190, and I just paid $700 an hour ago, which leaves me with a balance of $490 bringing me closer to that 30 percent mark I was shooting for, but now after reading all these posts, I am worried that it will, in fact, damage my credit. If they lowered my available credit when I was late, what are they going to do now? I wonder if I should cancel the payment–your thoughts?
February 17th, 2010 at 8:26 am
January,
Sorry for the delayed response. Unfortunately, it is difficult to predict how any particular company will react to something such as a large payment. In a normal credit environment, paying down your card would be considered a positive. However, I am assuming the interest rate is quite high and paying off the bill is likely a good idea from that angle alone, with possible benefits to your credit score.
February 18th, 2010 at 11:18 am
Thanks, Balance Transfer Helper.
Yes, I do carry a hefty interest rate. I have had the card since 2006 and have been late on two payments, the first time I was late they skyrocketed my interest rate to 29.99% and the second time they cut $1000 off my limit, so I think you’re right–paying it off is really the best idea.
I didnt cancel the payment–after mulling it over, I figured I might as well take a shot and see what happens! So, I will just sit tight and see if they lower my limit or not!
February 19th, 2010 at 6:08 pm
UPDATE:
Just to let everyone know (who’s following this thread)… I wrote to the Comptroller of the Currency with my complaint about how CitiBank lowered my limit to just $37 dollars over my balance without any prior warning whatsoever. I received a letter today from them saying they had opened a case file and had forwarded my complaint to CitiBank for a response.
Although I don’t expect any miracles, it’s good to vent and have someone who seems to actually care about my complaint.
I would strongly suggest that anyone else reading this post who has gone through a similar problem with their bank to do the same. The more of us that write in with complaints, the more these regulatory bodies will take note.
The address is:
Comptroller of the Currency
Customer Assistance Group
1301 McKinney Street
Suite 3450
Houston, TX 77101-9050
February 19th, 2010 at 6:16 pm
That’s the first postive response I’ve heard of someone getting from a government agency. Thanks for passing on the contact info Nick.
February 28th, 2010 at 9:06 am
Who needs this grief. Bank of American doesn’t have the integrity of a Payday Loan operation. Why work to improve you credit scores, when they can arbitrarily keep your credit score low. You can have no confidence in these sorts of people.
They are worse than the health insurance companies, your ok as long as you don’t get sick, and we are going to make sure you stay sick.
I agree with Dave. Pay the minimum balance. Your score is screwed anyway, and they are going to keep it that way. Look out for yourself. Be your own credit card company.
March 8th, 2010 at 3:01 pm
I had no idea this was happening, and I saw it happen to me today. I have a very similar story to everyone else, but I would like to add that I called Bank of America to see what their reasoning was. I also have excellent payment history, and I made a substantial payment on my card to reduce my utilization from 93% to 59%, and the reduction put me back at 96%. I thought there has to be some sort of human element behind these people’s decisions, but that is an incorrect assumption. The ‘senior credit analsyt’ I spoke with was completely scripted like she wasn’t dealing with someone’s life. She continued to tell me she completely understands, and I said I beg to differ unless she had been through the same situation and she said that there was no need to get personal. HELLO! This is my life, what do you mean? I have never felt like nothing more than a number in my life, especially considering I was penalized for a massive step in the right direction. I will try to go to a branch and see what I can do about having the limit restored (I’m sure all in vain) and will let you know what I run into when the experience is face to face and not over the phone. How can you possibly take progressive steps to improve your life when there are practices like this in place?
March 9th, 2010 at 10:02 am
Jarrod,
You may want to try to open a new credit card account if you need available credit. While it is really obnoxious of the bank to engage in these practices, you can at least take solace in the fact that you will be paying them much less interest in the coming months.
March 10th, 2010 at 3:43 pm
Just looked at my chase freedom today and saw my limit was lowered from 1800 to 700 even though I was never late on a payment. Like everyone else had a balance of about a 1000 for about a month – then paid it down to 300 and my credit limit gets lowered to 2 weeks later.
March 10th, 2010 at 9:54 pm
Well… I’m the millionth person this ‘foolishness’ has happened to. I thought I had great credit, until just an hour ago, I called to check my Target balance… and the computer said… “your available credit is $100″… WT*&%$*… when a month ago the computer said, “your available credit is 9K”… I am livid… I don’t want this to DING my FICO… so I thank all of you… I will apply for a new card, & write a letter to Controller of Currency (also, since I just got my census collection letter, I WILL MAKE SURE TO WRITE ABOUT THIS SOMEWHERE ON THAT PAPER & gladly mail back!) … REALLY, how do you go from 10% utilization rate to 98% utilization rate over night??? This is insane!!!! Grrrrrr!!!!
March 11th, 2010 at 11:22 am
Leslie,
I really understand your frustration. Credit limit cuts are literally destroying credit scores. And this is going to go on for a while, as banks can’t raise rates anymore. But you made the smart move. Opening a new credit card that gives you more available credit will help to offset the damage done by your credit limit cut. If you haven’t applied already, you might want to consider transferring your balance to the new card, so Target doesn’t earn any more interest on your balance.
March 11th, 2010 at 11:53 am
Leslie, remember also that this is a free market system. If I were you, I would:
1) Stop shopping at Target. Write their head office a letter and TELL THEM WHY you are boycotting Target.
2) If you bank at Chase… go in to close your account. Ask for a manager. TELL THEM WHY. Why should you “loan” your money to a bank (usually interest free) just so they can loan it to someone else whom they consider more credit worthy than you are *and* earn interest on it? Consider opening an account at a local bank or credit union.
3) Write the Comptroller of Currency about Chase. The more people that write them, the more they may take notice.
4) If you’ve had offers in the mail for any other credit cards, apply for them. If you can get new lines of credit, it will help keep your FICO up. Best to do this BEFORE the lower limit on your existing cards shows up on your report – usually takes a few days.
March 11th, 2010 at 12:21 pm
Thanks for posting the tips Nick. Your insights are always much appreciated here.
March 13th, 2010 at 7:09 am
Hmmm, so I just got a letter from Chase telling me that they have reduced my limit to just $200 above my balance. This after purposely waiting until after Feb 22nd to pay a chunk off. Now I’m kicking myself… I would’ve been better off leaving the money in the bank.
So I called Chase and immediately canceled my “Payment Protector” plan. After all, this is where they earn a good amount of money – just like electronics stores trying to sell you “extended warranties” at the checkout counter.
Also, we have our joint account at Chase. So I’m going to follow my own advise (from my previous comments here) and close the account next week. After all, why should I loan my money to them interest free just so they can earn interest re-loaning it to other people they consider more credit worthy than myself?
We will see how long it is before Bank Of America do the same to me.
March 14th, 2010 at 1:11 pm
That’s totally obscene, Nick, but at least you can inflict damage on them. I’m not a huge proponent of a mass exodus from the big banks-cause if everyone moved their cash, the banks would really be broke this time-but I think anyone like yourself who got the shaft should definitely take what business they can away from the companies that shaft them.
Also, good idea to pull the payment protector. Never heard anything positive or useful about those.
Hope to not hear about Bank of America, though they seem to be pretty big on credit limit cuts these days. The big concern is a domino effect, where Chase cuts, then BOA follows. Hope that doesn’t happen to you.
March 15th, 2010 at 7:02 am
Well we shall see. We have our mortgage through BOA so I’m not sure it that’ll change things in my case. I’d be interested to know if anyone has had their c/card limit cut by the same bank they have their mortgage through.
March 18th, 2010 at 4:30 pm
I have 3 acounts with Chase and after receiving notice that my limit was to be reduced by over half on one of them – a personal card, I called to inquire. Once I got on the phone with a loss prevention agent she promptly told me that not only was the first card going to be reduced but that the two business card wer also going to be reduced to well below half of what my original limits were. Essentially reducing my credit line to the pint that less than $3000.00 was available in total on these three cards. Now as I understand it, my personal credit rating as well as my business rating will be damaged along with the ability of my company to make certain purchases. We have always maintained a raesonable level of debt with payments on time and well over the minimum paymentbut the last 6 months has seen a major change in our customer base from small item purchasers to very high performance modifications that require a higher outlay by credit.
March 19th, 2010 at 12:16 pm
Anita,
Credit limit cuts hurt small business owners more than anyone. Many of us rely on credit cards for funding, and without available credit, we can’t purchase the things we need to make money. It makes me wonder if banks that cut credit limits on small business lenders are shooting themselves in the foot, since they are taking away the credit that might be used to earn money that could in turn be used to repay outstanding balances. Its really an absurd situation.
March 19th, 2010 at 12:38 pm
Personally, I think the banks are “throwing their toys out the crib” because the government is clamping down and not letting them get away with murder anymore. I think they’re trying to show everyone who’s boss.
March 21st, 2010 at 5:20 pm
And unfortunately Nick, they’re the bosses
March 25th, 2010 at 9:53 pm
I’m in the same boat as all of you guys are. I just found out that my $20K credit limit got decrease to $5300. What the &^%^*!!! I pay more than the minium each month, never late on payment, etc. My husband has chase too and havent gotten a letter, but I’m sure he’ll get one too. I have 2 other cards, one with credit and one just paid off. Going to pay stupid chase off so I can cancel them off. UGH!!!Does anyone know this question…. we’re military and we’re suppose to be transferring next year, will this
credit score hurts us in getting another mortgage? That’s the biggest concern we have right now. I know I dont want to apply for another/more cards…once the debts are gone, going to use cash and just use the card for emergency.
March 25th, 2010 at 11:55 pm
Just got an email from citibank cutting my creditline to $98.00 over my balance.
I have been a customer since 1988.In 22 years have not missed 1 payment,been late or over my credit limit.Before AMERICAN EXPRESS,CHASE,and now citi DESTOYED MY CREDIT SCORE I used to have an 807 score. Now I am afraid to look.We need to stop being abused by these banks and there 30% intrest rates.We need a good attorney for a class action lawsuit.
March 26th, 2010 at 8:26 am
Leigh,
If you are going to pay down your cards, don’t close them-keep the OPEN, especially if they are older accounts.
Lower credit limits will hurt you if you have balances of, say, 50% or more of your available credit. This releated to your credit utilization ratio, which accounts for 30% of your score. The lowever your balances relative your available credit, the better off you will be.
As to applying for a new card, that will likely cost you 5 to 10 points, but this only lasts about 6 months. Plus, having a new line of credit could help decrease your credit utilization ratio. However, if you are going to get a new card, do it as soon as possible, so you get the benefits to your credit score in the long run and you don’t have recent credit inquiries when you go to apply for your mortgage.
Hope this helps. Please feel free to contact me with any further questions. If you choose to apply for a new card, I would go with Discover, which is the only company that actually has treated its customers well over the past year. You can learn more about these offers and apply in the credit card comparison section of http://www.smartbalancetransfers.com
March 26th, 2010 at 11:52 am
Thanks Balance Transfers Helper for your quick response! Very much appreciated. Discover was the card that I just paid off a couple of months ago. I dont think that I’m going to apply for another card and then have them turn around and do the same thing that Chase did.
They should go after the people who are the irresponsible ones instead of responsible people. The people that makes their payment on time every month shouldn’t be punish for the people that are irresponsible on the credit payment. To me, that’s crap!
March 26th, 2010 at 7:30 pm
I recently had my credit line reduced to just over my balance by Chase. Back in early Febuary I refinanced my mortgage lowering my payments over $150. a month without taking any extra money on the loan. This should have improved my credit rating. I called Chase and they said I was at high risk. 14 years and never late on payments. I immediately payed off the entire balance and closed the account vowing never to do buisness with Chase again.
March 28th, 2010 at 10:05 am
Garry,
I wish you hadn’t closed the account. I understand your anger, but closing the account could actually have hurt your credit score in two ways. First, it could increase your credit utilization ratio. On that card, your CUR was 0, and that would have helped lower your overall CUR if you have balances on other cards.
The second issue comes from closing such an old account. This effectively shortens your credit history in the eyes of credit reporting agencies.
However, I must give you congrats for paying them off and stopping the flow of interest to a company that didn’t treat you well after a long relationship.
March 31st, 2010 at 8:31 am
Hi everyone,
Just wanted to give you an update to my post on Feb. 16. I received a letter from Home Depot in the mail yesterday. They ARE in fact, lowering my credit limit. Now to $700, which puts me right back to where I was–just lovely! I sent them a note today to reconsider. My guess is they won’t bring my limit back up to $1300. So now, I’m not sure what to do–pay the remaining $490 and risk them closing my account all together, or just paying the measly $22 a month minimum…GRRRRR.
March 31st, 2010 at 8:34 am
January,
If I remember correctly, the interest rate was really high. I would pay it off so you can stop paying them interest. While I don’t think they’d close your account, anything is possible.
However, if you pay it off, your credit utilization ratio will decrease, which should help your credit score. So you could pay it off, wait until your next statement hits your credit report showing you owe $0, then get a real credit card from someone that isn’t going to penalize you for paying your bills.
March 31st, 2010 at 11:02 pm
I spent over 2 years reducing my credit cards to zero. After reducing my credit cards to zero I figured I should keep my credit cards active as a safety net by making purchases and paying them off before interest could be charged. Today I check my Chase credit card (which was WAMU) and noticed they reduced my credit limit from $14,300 to $6,300. I called them and they told me it was due to inactivity. What do I do to stop this from happening to other cards I have? I worked so hard to get this point and now I feel I am being penalized for taking care of my credit. Should I apply for another credit card even though I do not have outstanding balance on credit cards? I do have an auto loan that will be paid off within 6 months. Should I pay that off early?
April 1st, 2010 at 8:08 am
Upset,
First off, congratulations on paying down your credit card debt. The credit limit reductions are an annoyance, but at least you’re not giving these companies your cash anymore.
As to you particular situation, I don’t think you should rush to apply for a new card. First off, you appear to have ample credit available. Secondly, paying off your debt will improve your credit score. If you’re other creditors start lowering your limits to a level that makes you uncomfortable, then it might be time to get a new card. However, I think you’re probably in good shape and that your improving credit score will make it easy for you to get a new card if more dominoes fall.
Jeff
April 2nd, 2010 at 5:55 pm
Hi,
Today I noticed that my Chase credit card (previously wamu) suddenly decreased my limit from $3300 to $500. I called up at once and found that due to inactivity, they have reduced it and that I can reinstate that April 5th 2010 by calling back. I don’t understand!! Thankfully I had no balance on that card and therefore no question of utilization!! This is the first time I am seeing this in 4.5 years in USA! I really wonder why they would resort to that all of a sudden. IN a fit of anger, I called Amex and asked them to increase the limit.. Guess what I got a 100% increase to $10K. Thanks for this website too!!
April 3rd, 2010 at 9:21 am
Satej,
I hope you kept your Chase card open. Please don’t make the mistake of closing it out of anger, as that can hurt your credit score, especially if you have only been in the US for 5 years.
I’m glad you found the site useful. Perhaps others should also consider calling another credit card company the currently do business with to request credit limit increases as you did.
April 6th, 2010 at 1:00 am
I just received a notice in the mail that my Chase credit card with a 0 balance has been lowered from a $4000 credit line, to a mere $500 due to non-use. I have been fortunate enough to have paid off ALL of my credit cards last year, and have been using cash-only ever since. However, this practice still pisses me off!
I hope that the “big banks” realize (as they are losing customers by the hundreds-of-thousands, I pray) the damage that they have caused to the economy, consumers, businesses, themselves, and other large banks through relentless “bending over” of their responsible customers. I, for one, will NEVER AGAIN do business with any of the “big” banks. This simple act of needlessly screwing with my credit lines has made me decide to transfer ALL of my funds (checking,savings, etc) to a local Credit Union, and never look back. I will still leave the previous credit lines open….but will never use them again.
We have a choice, people. I know how tough it can be to pay off all outstanding debt with these financial “rapists”, but it’s worth it…if nothing else, to hurt them back. Maybe, someday, they’ll have to close down a bunch of “customer service” centers in India because we have all decided to bank local and BRING THE JOBS BACK HOME to people and companies that might actually give a $#@!
I hope all of you are able to do the same. Take care, and never forget this “lesson” we are all learning in these troubled times.
April 6th, 2010 at 8:26 am
You’re dead on in your assessment of big banks, but I do think you using cash for everything, especially when you are a debt free responsible user, actually costs you money. Use a rewards credit card and pay it off in full everymonth. That way you get money from the credit card company for using their card and they don’t make a dime on your interest. And if you want to keep all your money from the big banks, use a rewards card from one of the few credit card companies that didn’t screw their customers last year, like Discover or American Express.
April 6th, 2010 at 6:51 pm
I originally had a Wamu card but Chase bought them out. I’m bummed b/c Chase just notified me to say that they will be “adjusting” my credit line from $3,500 to $500. That’s about an 85% reduction! Now, I can understand them reducing my credit line by 20% or even 25% but 85%? Come on! It’s not right. I will admit that my Chase card has a zero balance and I haven’t used it in over 2 years or so. I have good credit and only use 2 cards regularly – my Discover and another VISA card. I keep zero balances on both cards as I pay my balances every month. I would love to cancel my Chase card but I fear it lower my credit score. Now even if I wanted to switch over to using my Chase card, I can’t b/c my Chase credit line is so low that it wouldn’t be worthwhile for me to use it. *sigh* Any suggestions on what I should do? Should I just cancel my Chase card? Should I apply for another card – gas card perhaps? Should I just keep my Chase card and not use it unless they increase my credit line?
April 7th, 2010 at 10:36 am
I don’t think there’s much harm in keeping the card open. If you do want to close it, I would open a new card first, but not a gas card. Those are garbage. You’re better off with a general rewards card. But if you plan on applying for a mortgage or a car loan, you may want to keep this card open and not apply for a new one, since both actions will likely have short term negative effects on you credit.
Hope this helps and sorry to hear about the limit cuts. That is the number one issue this year.
April 7th, 2010 at 3:52 pm
I recently received notice that my Wells Fargo Visa account is being reduced from a 9K limit to a little over 3850.00! My bal was 3600 and so I am just about at my limit! The notice I received indicated negative report in my credit file, I researched and found nothing negative and when I try to call WF I get the runa round. So I jumped online to see what I can do and found this wonderful site. Dont want to close the account but definitleyw want to pay off. So I took the advice to hurry and get another card, which I was approved for through my credit union I have been dealing with for the past 17 years. I am going to pay off WF so atleast they wont be getting any interest from me anymore. Lousy b@$turds! During my review of my credit report, I discovered that Home Depot closed my account,not sure when or why but it was listed as on time/never late/ 0 balance BUT closed by the grantor. WTH?! Never received any correspondence from them re: this. But I am happy, they did me a huge favor ridding me of the prospect of paying that crazy arse interest rate again.
Thanks for the advice!
April 7th, 2010 at 4:40 pm
Thanks for the nice words Less. Much appreciated. It seems like you read the site pretty closely, so I’m probably wasting words by telling you to keep the Wells Card open.
I would bet that the closure of the Home Depot card was the adverse action. I really think some of these banks are conspiring to turn us into a subprime nation so they can charge us more every time we need a loan.
April 7th, 2010 at 5:24 pm
It really is a shame. During a vent session with co-workers two of them also reported similar issues with Chase backed accts. Yes, I will keep the account open but they can kiss my a$% and my money bye bye
April 8th, 2010 at 8:18 am
Nice, Less. Is good to hear from someone who doesn’t rashly close their accounts to spite the bank. Hopefully, the Home Depot card closure won’t cause anymore problems for you.
April 9th, 2010 at 8:38 am
Thanks to everyone who has shared their stories about credit limit cuts, with a special thanks to frequent poster Nick. Both Nick and myself were quoted in a recent Forbes article Consumers Squeezed As Issuers Slash Credit Card Limits.
I really appreciate that so many of you have taken the time to share your stories with me and other guests who benefit from your experiences and insights. It helps me provide other guests with up to the minute news.
So thanks again and please keep sharing.
April 14th, 2010 at 7:11 pm
So I’m in the same boat as everyone here.. and what really pisses me off is this.
The credit reporting “system” was originally created to determine the credit worthiness of a potential consumer… so.. to that end this complicated “equation” (which is of course a secret, a fact that in and of itself i think should be illegal, as you have no idea how you are being “judged”)was created and implemented which takes into account lots of hard and some not so hard and abstract parameters of a persons “usage” of credit products and even personal decisions not involving credit products.
The idea here is that my credit worthiness and thereby what products and rates i have access to should be determined by things I and ONLY I do or Do NOT do… that would be “FAIR” .
what i cannot swallow is that i am being judged and hurt financially by things i have no control over and have not done. Basically I’m being billed as an irresponsible and unworthy consumer because of decisions and actions that i did not make.
How is that fair? How is that legal? Why is this being allowed?
I had a credit account opened with GE to by my Central AC unit for my home. IT was a 9K limit and i got the unit on an introductory deal where if i paid it off in 12 months i paid no interest.So i did. About 2 months early. I was going to get a backup generator installed using the account.I got a letter from them that said they had closed the account due to lack of use!?!?!?!?
Now here is the kicker… fine… you wanna close the account because you didn’t make any money off me? I dig that… i would do the same thing… but the system is written in such a way that because THEY closed the account it dropped my credit score ?!?!?
What the @(#*$(!!! How is this legal!!
I’m in the process of selling my home and I’m going to by a new one in Florida. I’m a disabled veteran so my loan is a VA loan. I told my wife lets pay all our cards off so things look good when time to get the new loan in florida… so we did.
I have 4 credit cards with about 30K across them. I had about 15 k in balances. I paid them all off and without exception i received a letter from each and everyone stating they had cut my credit limit to $500!!! I now have 2K in credit card limits.. down from 30K!!!!!
If i do something wrong, ie. don’t pay a bill, over on limit, etc, then i should be hit for it. that’s fair. But if i do nothing wrong? Why should i be hit for it? Who can i hold accountable?
They decide they want to close account that’s their right i dig that. But why should that hurt me? Its a simple problem to fix. change the equation so that it doesn’t affect you! We can put people on the moon and send spaces ships to mars but we cant figure out a fair system to judge peoples credit worthiness??? Of course we can… the problem is we dont WANT TO, Human greed… to many wallets are handsomely lined with the spoils of this social raping… why would they change it…
This reminds me of a grade school play yard.. when the bully is standing there taking everyone’s money.. and the kids are crying in a corner saying to themselves “why doesn’t he stop doing this to us!!”
Well why not? Why should he? He’s got a good thing going. No ones stopping him… so he keeps stealing money as long as he’s allowed. Until someone holds him accountable.. then the abuse stops…
what do they expect when they are literally stealing from people with large grins on their faces… and of course Jamie Diamond(CEO of my wife’s company) has Obama’s number on speed dial… complete horse scat!
So what are we (the kids crying in the corner) going to do about it?
April 14th, 2010 at 7:26 pm
Update from April 6….Hi everyone! This is an update to my post on April 6. So I called Chase to B*TCH about my credit decrease and asked them to revert my credit back to the original limit. Much to my dismay, they gave me a measly increase and I just left it at that. Well, today someone from Chase called me to tell me that they will reinstate my original credit limit. I’m pleased that they took my complaint into consideration and called me. I’ve decided that I will be using my Chase card regularly since they do pretty good cash back rewards. In a few months, I will hit them up for a credit increase. he he he Good luck to everyone that’s had to deal with the credit decrease monster. =)
April 15th, 2010 at 8:01 am
Congrats and thanks for coming back to keep us all up to date. Hope to start hearing more stories like yours soon.
April 15th, 2010 at 8:08 am
Joe,
Thanks for sharing your experience. You really got hit hard, and it truly does seem unfair. It seems like you were caught in a domino effect, where every right thing you did led to a negative change in your credit. I hope this doesn’t hurt your VA loan; you did the responsible thing, paid down your debts, and the banks thanked you by lowering your credit scores. Amazing. My only suggestion is that you try calling some of the companies and asking to get your lines restored. This type of limit cutting is absurd.
April 29th, 2010 at 5:17 pm
Checked by balance yesterday and found that Chase credit card (previously WaMu)had reduced my limit to $300 above my balance. I was very surprised because I was not notified that the change was going to occur. Furthermore, since I use the card often, I could have easily went over my limit. Nevertheless, I called Chase’s customer service number, at which time they gave me a different number to call. Unfortunately the “other” number was only available 8 to 8 EST. To make a long story short: I called the other number today and they promptly restored my original credit limit. FYI – during my call with Chase I also asked if they could also reduce my rate (currently 13.24% var. was 7.99 fixed). The representative explained that they are currently not making “any” rate adjustments for cardholders and to check back in 3-4 months.
April 30th, 2010 at 10:06 am
Scott,
Thanks for sharing your story. I hope other Chase customers have the same luck you did. Also very interesting to hear about the rate adjustment situation. If you have success with that, I’m sure other readers would benefit from knowing how you pulled off that feat.
Jeff
May 1st, 2010 at 2:00 pm
I originally had a $9000 business credit card limit with Chase. It was cut to $1600 in Jan. 2009, but I got a mailing from Chase to apply for their Chase Freedom credit card. I was approved at $5000. (At this point I am up to $6600 with 2 c/c accts.) Then, about 3 months later, Chase closed my first credit card account (when it was a zero balance) and lowered the Chase Freedom Business card to $1800. In Nov. 2009 Chase again lowered the limit to $400. These credit limit decreases were automated for absolutely sure!!! At the $400 limit reset I had a web session open to check my available credit with Chase – it showed about $1600 open to buy with $200 used. When I clicked a $600 purchase – I was declined and shocked! I logged off the session at Chase and logged back in and it showed a reduced $400 limit !!! My business checking with Chase has my checking balance with a notation about my linked credit card (as overdraft protection) and it showed my prior available balance of $1600 (from the Chase Freedom card). Then, I complained in an email to Chase credit card about the ridiculous $400 limit. A month later a human called me and after talking with him, he said (in Jan 2010) that he had no problem increasing my Chase Freedom to a $2000 limit, which happened. Now 4 months after that, the automated system has struck again lowering my credit limit to $600 on May 1, 2010 !!! I just sent another email to Chase complaining. I feel this is a losing battle.
May 1st, 2010 at 2:29 pm
Denis,
Wow. What a hassle this must be. Chase is really one of the more active credit limit cutters, but the increases and cuts. I’m pretty sure its all coputerized; God forbid they used their money to hire people who could evaluate your situation subjectively.
If you have good credit, I’d ditch Chase and go with another company. I’m a big Amex fan, though if you need a Visa or MasterCard, Capital One and Citi may be good options. Although I typically wouldn’t recommend Citi, they haven’t been getting a lot of credit limit cut complaints. Plus, if you move your business checking account over to Citi, that may increase your chances of getting a new card with a decent limit.
Again, sorry to hear about the hassles. As a business owner, I really understand how frustrated you must be.
Jeff
May 1st, 2010 at 7:52 pm
Update to my April 6th post…
I recently received a call from Chase while I was at work….and the person informed me that they were reinstating my previous credit limit. At this point, I could not care less….they’ve already lost me for life as a “good” customer. I’m just posting this update to let others know that, apparently, they (Chase) DO listen to the recorded conversations between you and the “agent” when you call.
When I initially called Chase to complain, I politely told the agent “I understand that the ridiculous reduction in my credit line as a “reward” for being a responsible customer is NOT your doing personally, but since you are not able to help me correct this wrong….I will NEVER do business with chase or ANY of it’s affiliates EVER AGAIN. In addition, I will be posting my negative experiences with CHASE on as many internet sites as possible in an effort to make people aware of what a shady company CHASE is. I will also be telling all of my friends and family of Chase’s relentless and needless “shafting” of it’s good customers”.
For those in need of the credit line, I hope this serves to give you some kind of “ammo” when calling to dispute the crappy practices of Chase…or any other bank for that matter. Just be polite, but honest that you are going to let as many people know as possible about your negative experiences. Apparently, they actually listen to the recordings at some point.
May 2nd, 2010 at 8:10 am
James,
Thanks for coming back with the update. It never dawned on me, but threatening to post complaints online may be a really effective threat. The banks know most people don’t follow through with lawsuits and that the government rarely takes action against them. But they also know how easy it is to post comments online and that people can do that instantly. Great insight and thanks again for the update.
Jeff
May 2nd, 2010 at 9:18 am
I just had a TRIPLE WHAMMY in the matter of 30 days. Three Creditors cut my credit line. Not only did my score go from 747 three months ago to 701 today, it really pissed me off cause I get the letters like 2 weeks after the fact. I feel so screwed and pissed.
I emerged out of bankruptcy about 2 years ago (filed in 1998)and I was doing great, until this.
US Bank $7000 cut to $4400
Juniper/Barclays (scumbags) $7500 to $4400
Chase (former WaMu) $6000 to $3300
May 2nd, 2010 at 9:21 am
EC,
When it rains it pours. I wonder if there was a domino effect, where on cut and the others followed.
46 points is a pretty big credit score hit. I think the best way to get some of those points down is to pay down some of the cards, especialy anyone where you are close to the new credit limit.
I wouldn’t pay in large chunks. Another visitor reported that paying in large chunks led to further reductions.
Sorry to hear about his and hope you can get your score up with a few payments here and there.
Jeff
May 2nd, 2010 at 9:27 am
Also, in response to my previous post. I called the first culprit Juniper/Barclays because of the reason and they told me it was all a review of their records and my debt and my annual income, etc. The letter that I was sent stated that the reason was “Serious Delinquency” from Experian. I called the same person back and they told me the letter is a lie and they will not send me a letter back with the correct reason because doing so may get them sued. I didn’t fully understand, but the girl (from the Phillippines) gave me some choice words before she hung up…. “if you pay your bills on time, you would have no reason to call me upset.” I hate Juniper.
May 3rd, 2010 at 8:47 am
EC,
This isn’t the first time I’ve heard that innacuracies on credit reports were cited as the reason. I think they hide behind this, hence the refusal to send you a letter. There’s also a post from James a few days before yours that said he had some luck with getting his Chase limit up. That might be worth checking out.
May 4th, 2010 at 3:39 pm
When it rains it certainly does pour! I have had three credit cards lower their limit on me since November of last year. Yesterday I was advised through a “courtesy call” that Capital One had decreased my limit to $300 dollars above my balance. The first cc to do this was Bank of America. I transferred my balance to another card and they closed my account…something that I was considering doing anyways (but they bit me to it). The second was Chase.
Today, after reading this forum last night, I called Capital One to express my concern about the limit being lowered so close to my balance. They said there was nothing they could do. They mentioned that the decrease is something that they could not change and that it had been done to several other costumers due to the economy. The lady even put me on hold to see if she could try doing something, but she couldn’t do anything.
Two reasons were given to me:
My balances are too high with respect to my limit (I wonder why?)
A mortgage issue (I have never had a mortgage).
I am really worried, but this forum has been very helpful.
Thanks.
May 5th, 2010 at 8:16 am
Bri,
Am glad to hear Smart Balance Transfers was helpful. While I put a lot of time into this, people like you who share stories really make a big difference.
I’m sorry to hear about your situation. And you seem to be in the same boat as a lot of people.
A new trend that I’m hearing about is that the reasons given for limit cuts are often inaccurate, like the mortgage you never had. You may want to check your credit reports to make sure there isn’t an error, but more than a few people have said that their companies cited incorrect reasons for decreases.
As to strategy, it really seems like the best approach is to work on paying down your balances, especially on cards where you are using the most credit. This should give you a boost to your scores and then you can look into a zero percent balance transfer to pay down the rest.
May 20th, 2010 at 10:30 am
I had a $24,000 balance on my Bank of America card with a $25,000 credit limit. It was paid off in full. One week later I received a letter stating that my credit limit is now $500! So, my credit limit was reduced b $24,500. Thanks Bank of America, you really do suck.
May 20th, 2010 at 11:00 am
Wow, that is the biggest credit limit cut I’ve heard of. On the bright side, congratulations on paying off your card.
This might not make matters seem better, but because you owed so much relative to your credit limit, the damage to your credit score shouldn’t be so bad.
You may actually see an improvement and, because you no longer owe so much money, you should be able to get a better card with an adult size credit limit once your new balance is reported. But seriously, a 24,000 credit limit cut. Insane.
June 9th, 2010 at 8:24 am
I have established a line of credit account, money which I have saved and use as my personal credit line. Any money I spend immediatly becomes a bill to pay. In addition to any payments, I also add money toi the account each month so my “credit limit” constantly increases. Of course it does nothing for my credit score but i do not have to worry about decreased or closed credit accounts. (I do have 1 credit card with a credit union which i use to maintain credit activity, but it is used very sparingly and always has a zero balance.) Anything else, I finance myself. I do have one que3stion, where would you recommend that I keep this money? Sinc e it is a line of credit rather than an emergency fund, it is used fairly regularly so i would need it to be readily available. Thanks for your advice.
June 9th, 2010 at 8:26 am
yikes next time i will spell check before submitting lol
June 9th, 2010 at 8:34 am
Denny,
No worries about the mispellings.
To get a little yield while still keeping access to your money, I would open a high yield savings account that you can link to your bank’s account and do easy online transfers. Off the top of my head, Ally Bank might be a good option. They tend to have high rates. I think American Express and Discover also have high yield savings accounts that link up to checking accounts. You can also search Bankrate.com, as they have a pretty comprehensive list of savings accounts.
You won’t earn a ton (like 1.4% or so) but its better than nothing and likely to increase in the future.
June 15th, 2010 at 9:45 pm
I have a similar story to all of you, a 30K credit limit with Bank of America cut to $1,600 after paying the balance down from $29,800 to $1,540. Craziness (though I’m feeling a slight bit of comfort knowing I”m not alone.
Luckily, I’m in a position to pay off the remaining balance to BofA and also pay down the majority of a $15K balance on a Citbank card.
What I’m wondering is if it would be beneficial to, say, this month pay the Citibank card down to $9,800 assuming they will then cut my limit to $10,000. Then in the next month make another payment to lower the card down to the $4,000 balance that I have the cash to do. I guess the question I’m asking is are the banks lowering your credit limit each time payments are made, or could you play a game with them and trigger only one line reduction to a line that would be comfortable for emergencies, etc??
Thanks
June 17th, 2010 at 8:28 am
Kristie,
I haven’t heard reports of Citi doing the same as Bank of America and Chase with these reductions. If you have online payments, maybe test the waters by paying a thousand dollars every couple of days to see what happens. You may beat them by playing the game this way.
Another positive is that, although your Bank of America credit limit was cut, your outstanding debt is now much lower, so you may escape a massive credit limit cut because of that.
Hope this helps and let us know if you have any luck.
June 17th, 2010 at 12:42 pm
I was shocked to discover our Wells Fargo credit card with a credit limit of $15,000 and only $2,700 balance reduced to a $2,800 limit leaving me with $100 available credit!! This happened in one day!! So our previously low balance is now almost at the max which leaves us with no cushion for emergencies and lowers our credit scores. This is a terrible way to treat long time loyal customers (we’ve been customers since 1975)!!
June 17th, 2010 at 12:45 pm
Am sorry to hear about this. It had looked like credit limit cuts were slowing down, but as soon as things start looking up, something like this happens. If the credit limit decrease was very recent, you may want to apply for a new credit card as quick as possible so that you will be evaluated based on your old credit card usage instead of the new level that makes you look maxed out.
June 21st, 2010 at 3:56 pm
Just like this blog and other websites I have looked at today, my husband and I have had limit cuts on our Bank of America cards this year, and this week on my Chase cards. All the years of trying to be on time and pay more than the minimums were for nothing. I am curious how many of the affected people are baby boomers with probably a limited time left before retirement and maybe fixed incomes in their futures.
June 22nd, 2010 at 10:45 am
Mary,
I think you raise a good question. I too wonder if they are targeting baby boomers, not only because of pending retirement, but also because of the tough job market for people nearing retirement. I wouldn’t be surprised if the computer models they use are set up to reduce credit limits on people who fit baby boomer profiles.
June 24th, 2010 at 9:01 pm
Great info on this site. I am a small business owner who lived off credit cards in 2008 when business was not good. I have been making timely payments, more than minimums, for over a year now and reduced my credit card debt about 40%. But every time I make a payment, the bank reduces my limit. Citibank, BoA, Chase, PNC. So my credit score/report looks horrible and doesn’t reflect any debt reduction. Today Citibank closed my business account. I told them thanks for helping America’s small businesses. If these banks have so much control over our credit scores and what shows up on our reports, how is this fair credit practices? Who can we go to to see about adding another reporting item to credit reports–”Original Credit Limit”
June 25th, 2010 at 8:22 am
Sorry to hear you are getting hit with a barrage of credit limit cuts. I wonder if its a domino effect, where once one company cuts, another sees it cuts. It really is a huge issue, especially since you are using the card for business. But I think banks, no matter what they say, are not willing to lend to businesses.
Not sure if you saw this above, as there are over a hundred comments, but you might want to pay down your credit cards in smaller increments (less than $1,000), as this might help prevent automatic credit limit cuts by computer programs. Hopefully its not too late.
June 29th, 2010 at 2:05 pm
Last month Chase lowered my credit limit from $46k to $10k. There’s a $5k balance on the card. I called and inquired about it and asked for an increase. They bumped it up to $15k, but that was all they could offer.
I’ve had the card for about 12 years – they were the ones who repeatedly increated the credit limit, withOUT my prompting them to do so!
Is $46k too much available credit for my $100k annual salary? Certainly! But, I liked having it “in my back pocket” so to say.
June 30th, 2010 at 7:59 am
Kate,
I am really surprised to learn that Chase actually gave you an increase when you complained. If you stop by again, it would be very helpful to other readers if you could share what arguments you used to get your limit increased. Many people have shared stories about getting nowhere with representatives, but you are one of the few who have been successful.
Thanks for posting.
July 1st, 2010 at 9:04 pm
I really like your website. I’m very astonished. I have been a Bank of America customer since 1982 and my credit limit was decreased for no reason at all.
July 2nd, 2010 at 10:23 am
Thanks for the kind words Michael. I wonder if you fall into the Baby Boomer credit limit cut demographic Mary was speaking of.
July 2nd, 2010 at 10:37 am
I guess you’re right about the baby boomers thing, but what I’m worried about is I like to know that I have some credit in case I need to use it for emergencies. I’m a homeowner with my house fully paid off. You’d think these banks would consider that. I guess not. It’s very stressfull, to say the least. I’m trying not to worry about it. I’m glad I have company – it helps to know you’re not alone. Has anyone written to their senators/congressmen about this?
July 2nd, 2010 at 10:41 am
Michael, the problem with credit limit cuts is that the banks have every right to do them. The CARD Act took away a lot of other options from the banks, so the main tool they have for risk management is to stop lending to people, even when common sense would dictate otherwise. Two years ago banks would be bending over backwards to lend to a long term customer who fully owns his home. Now it seems they may be profiling and cutting limits on people because they anticipate a drop in income from impending retirement.
July 2nd, 2010 at 1:02 pm
I called Bank of America and they told me that they expect me to make 3 times the minimum payment to qualify for a credit line increase. It seems to me like the more I will pay down the card, the more they’ll decrease my limit. Is that how it works? Then why should I bother making more than the minimum payment? It’s crazy. The whole system’s screwed up.
July 4th, 2010 at 10:02 am
Very similar story to many others. I had about a $31,000 limit on my FIA credit card with a balance of about $9,500. I also have credit monitoring and I got a notice this morning that my credit score reduced, so I logged on thinking it probably dropped about 2-3 points…however it was reduced by 21 points!!! Apparently FIA reduced my limit to $10,000 and cited reasons as: having a substantial balance and having a judgment against your credit report (an error on my report). This is the first time something like this has happened to me and I’m concerned because if pay this balance down to about less that $5,000 in the next couple of months…the trend is going in the direction that my limit will be decreased also. I’m going to try to make small payments however I don’t want to give this company another cent in interest towards my balance!! This situation and the many others I’ve read on this site seems to be so unfair and unethical!! Do you see any change in the immediate future for this by any laws that may be passed or anything?
July 4th, 2010 at 10:03 am
Thanks in advance for your response
July 5th, 2010 at 12:05 pm
Michael,
It seems like many people are reporting that making large payments triggers credit limit cuts. But the more you pay, the less they earn in interest, so I tend to think the best thing is to pay off the debt and look for a new credit card later. Even if the limit cuts hurt your score a little, having less debt will make you a better applicant with another company.
July 5th, 2010 at 12:09 pm
DP,
I don’t think credit limit cuts will ever be controlled. After the CARD Act, they are really the main tool banks have to control risk. They seem to be using it on the wrong people, but this isn’t an issue like rate increases where the government can step in.
As to your situation, I would take a shot at a few $900 payments scattered every couple of days. This may prevent you from getting flagged for a decrease, but if it doesn’t, getting the error on your credit report fixed and paying down your debt should make you look better on paper to the credit card companies.
July 8th, 2010 at 4:05 pm
This same thing just happened to me, conveniently right on the eve of the Credit CARD Act taking effect on July 1st (not that that would have helped me much as there are no stipulations for credit limit decreases). Here’s what happened to me. I had FOUR accounts with Chase that they slashed down to 500-600 above my available balances. Interestingly, they did this on all 4 on the same date, which happened to be the date I made increased payments on all 4. Collectively, I had 32,000 in credit. I am now reduced to just under 15,000. One of my cards is now 91% maxed out!!! They dropped that one from 8100 to 5700 (balance is 5159). Second card, they dropped me from 11,600 to 4,900 limit (that is a 58% reduction!). I am now 86% maxed on that card. Third card, they dropped me from 5,800 to 3,300 – a 43% reduction of my limit and that card is now 88% maxed out. Fourth and final card, they reduced me from 5,000 limit to 2,900. Now that card is 87% maxed out. They have destroyed my credit in one fell swoop. I just received notification yesterday that they did this to all 4 accounts on June 30th. I have already lost 1 week of reaction time. I have filed complaints with the OCC, the FTC, the Better Business Bureau and am posting and plan to continue to complain to every agency I can. I got a great list from the Federal Reserve site for consumers to make complaints to Attorney Generals, Credit Advocacy Groups, all sorts of good stuff. Two of these cards were formerly WAMU cards, bought out by Chase – I was a good customer for THIRTEEN YEARS. I pay on time and I always pay more than the minimum. The other two cards I had for 3 years and 5 years – same deal with them. I am a 44 year old woman who now feels like I am 21 and living paycheck to paycheck again. I don’t know what I will do in an emergency situation and I feel like I am on the verge of financial ruin as this most certainly will have a snowball effect. I would imagine any other cards I have are going to reevaluate me and do similar based on my now 86-91% maxed out balances. These 4 cards with Chase were my highest limit cards – the ones that gave me a sense of security. I feel like I’ve just been raped. And all of this after this huge bailout after banks like Chase preyed on individuals with mortgages. If this doesn’t show downright contempt for consumers, I don’t know what does. This reminds me of the type of situation that occurred with the farmers way back, remember when the FHA was demanding people’s mortgages paid in full or lose their homes? Farmers were losing everything they had ever worked for and many committed suicide out of desperation. What is the point of establishing a good credit history when they can just swipe it away from you in a heartbeat like this? It’s unconscionable what this bank is doing to people.
Despite concern for applying for a new card now (I worry about are inquiries due to applications going to add insult to injury), I applied for the 0% APR Discover card linked on this site – I have been turned down (that’s not the norm for me, so who knows, maybe my score has already plummeted). I then applied for Wells Fargo Rewards card (my banking and debit card is through them) and I did not receive an outright no, but told that I must wait 5-7 days for an answer (usually not a good sign). This is scaring me even more. If they had cut even ONE of my rates this drastically, I would have been extremely upset, but to do this to 4 accounts across the board with no notice is unbelievable to me.
July 18th, 2010 at 3:38 pm
Sadly I’m revisiting this blog to update further on my experiences with credit limit cuts. Some of you will know (from my previous posts above) that it all began with CitiBank slashing my CL to just a few dollars above my balance with no warning or reason around the beginning of the year. This was closely followed by Chase and, subsequently, even my BestBuy 0% store card (HSBC Bank). This week, CitiBank have “chased down my balance” by cutting it once again to just over my balance after paying off approximately $1,000. Today—and I knew this was going to happen—Bank of America have just done the same to me.
So I’ve never missed a payment with anyone, have impeccable history and was nowhere near any of my limits. As a “reward” for my good efforts and diligence, I am now MAXED out completely on all my cards and, to anyone checking my credit report, I probably look like I’m in the stickiest situation since Sticky the stick insect got stuck on a sticky bun!
I called Bank of America just for the hell of it (knowing full well it was futile) and the chappy on the other end of the phone told me it was all due to the CARD Act. I said “fine, but why should I be punished because other people haven’t been paying their bills?”. He questioned why I was being “punished”. I then told him… I pay my bills on time, pay more than the minimums and I get rewarded with a plummeting FICO score as a result.
He then told me that there was a bill going through congress to address credit score issues of people like me in this situation. So, if anyone knows of such a bill and who the main sponsors are, I would very much like to know the details so I can contact congress people and urge it through ASAP.
In the meantime, I’m glad I decided (however tempted I was) to not pay off my BoA, Chase and CitiBank accounts any more than I did over the last few months. I know I’m paying a bit of interest there but I do have several thousand in the bank as a result. Although I don’t like the idea of paying these guys interest, it’s worth it to make them “sweat”. I should also reiterate that I took great pleasure in canceling the “credit protector” insurance on all these accounts.
Nick
July 19th, 2010 at 10:22 am
Wow. Its good to hear from you Nick, but not like this. I really can’t believe it–this has been like a slow motion train wreck for the better part of a year. I know you like to keep a cash stash, but you should consider paying at least the highest interest accounts down. Maybe you’ve reached the point where they can’t cut anymore. Its really baffling and I’m really sorry to hear this keeps going on. Hope everything else is going well for you.
August 12th, 2010 at 10:45 pm
i got a letter from chase about reduced my credit limit from 4500 to 1000 the reason is ” Sufficient credit available with us” wtf is that? that is BS. i never late or missed my payment ever! and i use the card no more than 10% of the credit limit, the highest balance i had was 20% and even that i always knocked it down to 10% before the bill print out ( i did this because i want to get the reward) and i always paid off my credit card every month too. anyone know what should i do with this stupid chase? close it or ..?
Thanks
August 13th, 2010 at 8:01 am
Forrest,
I wouldn’t cancel the card, as that could negatively impact your credit score (unless there is an annual fee, in which case it may make sense to cancel). If this is your only card, you may want to get another so you have a high enough credit limit in case of emergencies or to use for travel. Otherwise, you can try to negotiate an increase with Chase. You may not get anywhere close to your original limit, but if you call a few times and get the right people, you may be successful.
August 13th, 2010 at 6:04 pm
Balance Transfers helper,
Thank You! for your advice i called chase and they just raised my credit limit to 2000, im still pissed but i guess thats better than 1000. will it affect my credit history if chase lower my limit? any idea what credit company that wont lower my credit limit?
Thanks!
August 21st, 2010 at 3:18 pm
I’m suddenly in the same situation as Lisa, who posted earlier: I have 5 Chase cards (each originally with a different company, but all acquired by Chase over the years). I received 5 letters yesterday cutting my credit limits from a total of $84,000 down to $31,000, which pushed my CUR from 30% in the aggregate to over 90% on most cards. Like Nick and others who posted, now I look like someone who maxes out his cards instead of someone who took advantage of those 2% APR cash advance checks (which I used to replace the roof on our house and repaint, because it was cheaper than a HELOC).
Some of these accounts I’ve had for 20+ years. What a nice reward for being a loyal Chase customer! I am actually a “good” customer for Chase (i.e., they make money off me since I carry balances every month instead of paying them off).
Like Forrest, one of the reasons given for all of my cards was “Sufficient credit available with us”. Not any more! Now I’m heading to the credit union Monday to try to open another account; hopefully it’s not too late.
August 21st, 2010 at 3:55 pm
Follow up to my prior post: I just checked my credit report, and while the limit reductions haven’t been posted yet, I noticed that another card that I have with Citibank with a $0 balance was closed this month (they haven’t bothered to tell me yet). I don’t know if this was a triggering event for Chase, or not. That account had a $17,000 limit, so now my aggregate CUR is even higher!
August 22nd, 2010 at 6:38 pm
We paid our citi card down also, and THe lowered our credit limit. We really felt like we were Kicked and if we had known this would have happened, we would not have even paid it down with sucha a big chunk. Now as I see it…. they just put fire under us to get out of debt and not be a slave to the banks. Why are people actually upset that banks will not lend to them and they become slaves to these banks? And worrying about a FICO number is ludicrous. Has it come to this…. we are nothing more than a FICO and Social Security number to the Government? Seems really twisted that people are upset because Banks or lenders don’t want a relationship with them. Sounds like a gilted women begging her lover to take her back….she will do anything to be kicked down again and she can’t live without him. I say good riddance and I can’t wait for the card cutting divorce party. We always win when we save and keep our own cash. I am just a little person…why pay teh big banks as they make big money.. andcan go on these fancy vacations, drive fancy cars, live in big houses and jerk us… and we are just giving our money away. I mean competing with each other to just give it to them witha smile on our face. You think they really care that we are struggling just to keep a roof over our heads? They get this tarp money then will not lend to small business so they can grow and hire. Seem to me we are being punished. Why?
August 22nd, 2010 at 6:39 pm
Sorry for spelling. I was “heated”
August 23rd, 2010 at 7:46 am
Wow, when it rains it falls. I wouldn’t be surprised if the Citi event triggered the Chase event. A lot of times, one company will follow another. While you may not be able to get your full credit limit increased, it may be worth a shot to call Chase and see if you can get some credit restored. A number of people have written in recently sharing success stories.
August 23rd, 2010 at 7:49 am
Ann,
While I think you’re a little harsh on other guests who have posted comments, I do respect your attitude. Get angry, get out of debt, and stop sending money to your credit card company. That’s an attitude we can all benefit from.
August 23rd, 2010 at 8:13 am
Well… I recently got yet another letter in the mail from Chase with some kind of $200 coupon saying that if I opened a business checking account with them, they would deposit $200 into it. After what they’ve done to me, I took great pleasure in sending the coupon into the branch manager along with a letter telling them that they’d already lost my business checking account to a rival bank due to the limit decreases on my credit card account. This, by the way, is a business account that has no less than a five figure sum in it at any one time.
Of course, I haven’t heard anything back from them so I assume they’re simply not that bothered about getting that business back.
August 23rd, 2010 at 8:30 am
Hahaha. Its great to hear from you Nick, especially when the news isn’t bad. I’ve been getting those offers too. I think the fine print requires that you make 50 transactions a month or they can seize your car. And you need to provide a blood sample to get the check.
August 24th, 2010 at 5:42 pm
This morning AMEX called to tell me that my $22K credit line was getting cut to $15K, just $1K above my current balance. I pay 2x the minimum and have never been late. They then proceeded to tell me that if I made a $11K payment within 72 hours, my limit would not be decreased. Sounds like extortion!! What do I do: pay them their $11K to keep my credit line at $22K, or let them drop it and play the declining credit limit game? If I let them drop it, am I going to have to look forward to all my other cards following suit??
August 25th, 2010 at 7:49 am
Sel,
This is a tricky situation. Oftentimes, a credit limit decrease from one company triggers a wave of decreases by others, though it is not set in stone that this will happen.
If you have the 11k and don’t need it for emergencies, it may be worth paying simply to reduce your interest expense. If they keep their word and leave your credit limit alone, all the better. However, if you don’t have 11k, but have a few thousand, it may be worthwhile to pay some of the card down after the cut, as this will reduce your credit utilization ration and help mitigate the impact of the credit limit decrease.
Lastly, try calling a few other reps to see if you can get a different answer. Offer the 5k and see if they’ll only drop your credit limit a little, as opposed to the full 15k.
Hope this helps and do share if you have any success.
August 25th, 2010 at 2:07 pm
I am definitely still experiencing this “wave of decreases.” I just recently received notice that my Sears Gold Master Card was reducing my credit limit from $8K to $250! I decided to close my account with them. This is the fourth credit card that decreased my limit.
August 25th, 2010 at 2:11 pm
Bri,
If you are concerned about the impact this last cut is going to have on your credit score or you need credit, you may want to get a new 0% APR credit card before the rate decrease and card cancellation is reflected on your credit report.
August 25th, 2010 at 2:28 pm
Thanks for your reply. I have considered this option, but I am currently unemployed. What I have done so far is to transfer my balance to mainly one cc, so as try to lower my balance in the credit cards that have lowered my limit and of course paying as much as possible to lower my debt.
August 25th, 2010 at 2:52 pm
Bri,
Sorry to hear about the job situation. I wish you the best of luck.