Comments on: What To Do When Your Credit Limit is Decreased

By: Jeff Weber

Jeff Weber — Wed, 14 Dec 2011 13:52:39 +0000

Wow, that’s an unusual response. Its not atypical for credit limits to be reduced and, given the explanation, it sounds as if the limit could be increased or at least reviewed for an increase if your husband requests it. But I understand your frustration and surprise. I was of the impression that most banks sent out courtesy notices on credit limit cuts, though I am not sure if they are legally required.

By: Ellie

Ellie — Wed, 14 Dec 2011 09:24:33 +0000

Just received one of those “No Interest if Paid in Full Within 18 Months” promotions for our Home Depot Card (by Citi) which we’ve not used in probably 18 months. Whenever we have used it, we’ve done so during a 12-Month Same As Cash promotion and paid the balance in full somewhere between the 10th and 11th month (free money). We’ve never carried a balance otherwise. Well, with this new promotion, I noticed that it stated “According to our records, your account still has $5,001.00 in available credit as of November 1, 2011.” I was floored! That means that sometime after November 1st, our credit limit was decreased from $12,000.00 to $5,001.00 and NO ONE EVEN NOTIFIED US! And what’s with the $1.00 tacked onto the end of the credit limit? Never seen anything like that before.

I contacted Citi thru its Home Depot CSR number this evening and was told it had nothing to do with our credit or any other reason, it was simply — lack of use/inactivity and “for our security”. I spoke with my husband who’s traveling and will be calling them first thing in the AM to dispute this. The CSR guy did tell me that if “Mr. X (my husband) thought he needed the higher limit, he was welcome to call and let us know.”

What in the world was that all about?

By: Jeff Weber

Jeff Weber — Mon, 21 Nov 2011 15:37:22 +0000

Phillip,

It seems like credit limit cuts often trigger a domino effect. This can obviously be a huge pain, but if you haven’t yet, you may want to consider calling up and lobbying for at least a partial reinstatement.

By: Philip

Philip — Sat, 19 Nov 2011 08:58:35 +0000

Bank of America and Citi both pulled this on me. I’ve been a customer for several years and have never paid late. I’ve also handed over thousands in interest. In protest, I’ll never finance using a bank card again. I hope that what they gain in the short-term is far outweighed by what they lose in the long-term as a result of ticked-off ex-customers who refuse their business and encourage others to do likewise.

By: karen

karen — Thu, 17 Nov 2011 07:06:12 +0000

I was never late on any of my bills or credit cards but one bank decreased my credit line and all started falling right behind each other credit is very important to manage in this world but i have gotten to a point these banks are a rip off. i was always about living for the future i live for today so i now manage with my cash no more going broke i paid a chunk of cash to citizens bank and what did they do decrease my line no reason but to make more money because they saw me paying my card off. DONE what do i say to hell with them!!! Yes as bad as it is i closed them out

By: Jeff Weber

Jeff Weber — Mon, 07 Nov 2011 15:29:02 +0000

Mimi,

You present a pretty dire picture of the world. Yes, there are all kinds of negatives, but the idea of this article and discussion is to help people who want to keep a good credit score.

By: Mimi

Mimi — Fri, 04 Nov 2011 19:46:54 +0000

MANY consumers are NOT paying off their balances, why bother? It does NOT make your credit worse from dropping your limit to false appearance of OVER EXTENDED. Look it up, not paying is about a 10-15 point loss, over extended upwards to 30. Plus economy, no job or poor paying job, while corrupt congress, banks, etc etc make hand over fist profit on our backs. AND they know turning a blind eye to illegal workers, will keep salaries DOWN. We have the lowest min wage and salaries worldwide. Plus, we LEGALLY pay people $2 or $3 per hour, just like India etc and all are fine with this. Disgraceful! Down with capitalism, aka corruption, bank back handers.

By: Balance Transfers Helper

Balance Transfers Helper — Tue, 11 Oct 2011 14:39:23 +0000

Socialmedic,

This is becoming a relatively common practice and it can hurt your credit score as your credit utilization ratio and available credit both are being adversely impacted. If you need additional credit, I would consider opening a new card. Even if you don’t need new credit, opening a new card will increase your available credit and decrease your credit utilization ratio, two factors that can improve your credit score.

By: Socialmedic

Socialmedic — Tue, 11 Oct 2011 05:14:03 +0000

HSBC has been playing credit limit games with me for more than a year. Every time I have decreased my balance by a significant amount they have dropped my credit limit by a similar amount. The credit limit was 1500 dollars and when I went under 80% they dropped it so I went down to 80% of that they dropped it again. So I started paying on the pay it off in three years plan and when that got to 80% they dropped my limit again. Last month I had a limit of 905 and a balance under 600 and I decided to pay double the amount to bring it down under 600 and they immediately dropped my limit to 605. I finally wrote them a nasty letter and I am fully prepared to pay off the balance and close the account if they do not lower my interest, which is above 20 percent and give me a damn good explanation as to why they have been treating me like crap.

By: Greg

Greg — Sat, 24 Sep 2011 20:39:59 +0000

I got a tip. I read online, that if you have a balance (Yes, I know you shouldn’t but it happens). If you are not going to pay it off. Decided what you are going to pay off. Keep $200 of the amount your going to pay off. Some Credit cards will pull aa sneaky on you. When you get your statement (Online), pay the big chunck off. About 5 business days before your next statement. Check to see if they decreased your limit. If they have it & it is close to the credit line, pay the $200.00 you saved. This may keep you from getting an over limit fee. I read this happend to a few people.

Carolyn are you sure that was a legit call? I never heard of a bank calling. They usally just descrese the amount & send you a letter.

By: Balance Transfers Helper

Balance Transfers Helper — Sat, 24 Sep 2011 18:40:44 +0000

Carolyn,

I agree with you completely. Credit limit decreases are essentially the result of all the restrictions put on credit card companies. In the past, your company may have raised your interest rate, but your credit score would not have been harmed and it would have been easy for you to use a balance transfer to move your debt to another company. Today, credit limit cuts are being determined by alogorithms and applied with seemingly little logic to accounts that are almost always held by people like yourself – i.e. good customers who always pay on time.

If the credit limit cut was extremely severe and you now lack sufficient credit, I would consider applying for a new card from a different bank before the decrease impacts your credit score. Then, I would use a balance transfer to move your business away from the bank that clearly doesn’t appreciate your history as a good customer.