Why did my credit card limit go down?

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3 posts
Allison2010
 
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Joined: Tue Aug 17, 2010 7:08 pm

Why did my credit card limit go down?

Postby Allison2010 » Tue Aug 17, 2010 7:13 pm

I just had my credit limit cut almost in half for absolutely no reason. Why did my credit limit go down? I have used the card occasionally but never more than 25% of my limit. When I called customer service at Bank of America they said the reason for the cut was because I didn't need the credit. I feel like it is a no win situation :mad: If I use too much of the credit limit they will cut it for being a higher risk. If I use too little they will cut it for not using it. I use the ideal amount and they STILL cut it! Is it possible for me to win?


jeffysdad
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Postby jeffysdad » Thu Aug 19, 2010 6:03 pm

I've had some of my limits cut for what seems like no reason, too. It doesn't seem fair, but there is a reason for it. Any open line of credit is a potential liability (read risk) for the bank. If they can bring limits down they minimize their risk. While this might not have been all that important a few years ago (cc lines would seem to be a drop in the bucket compared with credit default swaps, etc.), it is now that banks are forced to undergo stress tests, sort of a check-up on their vulnerabilities.

The only time I had my lines cut was when I did something to draw attention to myself. One time I called the bank to have a portion of one line reassigned to a different card at the same bank. They were happy to do it but in the process shaved about 20k off my combined limit. Another bank whacked a $54k limit almost in half when I opened another account with them. There's no way in the world I would have ever used that much credit, but it was kind of nice having it.
American Express: Blue Cash Preferred (groceries, 6%; gas, department store, 3%); Gold Delta SkyMiles (Delta Air Lines, 2 miles/dollar, free checked bag).
US Bank: Cash+ (utilities, phone, internet, restaurant, 5%; drugstores, 2%).
FIA Card Services: Fidelity Amex (everything, 2%); Fidelity Visa (everything, 1.5%).
Chase: Freedom (rotating, 5%); Amazon (Amazon.com, 3%); PriorityClub (IHG hotels, 5 points/dollar); Sapphire (not in use).

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Mogul of Pineapples
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Postby Mogul of Pineapples » Fri Aug 27, 2010 6:27 pm

jeffysdad wrote:I've had some of my limits cut for what seems like no reason, too. It doesn't seem fair, but there is a reason for it. Any open line of credit is a potential liability (read risk) for the bank. If they can bring limits down they minimize their risk.


I think that's why we are seeing the shift by banks to more Visa Signature and World MasterCards, since the credit limits are not pre-set.
Disclosure: I am a moderator/paid staff of this site, which does have advertising relationships with some credit cards that are discussed and linked to. Regardless, anything I say is my honest opinion.

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