Banks Trimming Limits for Many on Credit Cards

[Newsjock]

Source: New York Times

The easy money that led Americans to depend on credit cards to pay their bills is starting to dry up.

After fostering the explosive growth of consumer debt in recent years, financial companies are reducing the credit limits on cards held by millions of Americans, often without warning.

... Banks and mortgage companies are required by law to notify customers within three days of changing the limits on a home equity line of credit, and many have been aggressively lowering them. But credit card lenders have 30 days to notify their customers, and often do so only after taking action.

Such moves can cause a consumer’s credit score to drop, forcing the person to pay higher interest rates and making it harder to obtain new loans.

... Cardholders in places like Orange County in California, Atlanta and Phoenix have noticed their credit lines shriveling up.

John D. Craig Jr., a college administrator who lives near Niagara Falls, N.Y., said he had regularly been paying own his balance on a rarely used card when Chase told him it was reducing his credit limit to $4,000 from $20,000. The news took him by surprise.

Read more: http://www.nytimes.com/2008/06/21/business/21credit.html?_r=1&ref=yourmoney&oref=slogin

[Debi]

1. I had a $0 balance credit card cancelled and had two cards with balances limits lowered

to the balance owed. Nothing in my recent history would create a concern w/my ability to pay, they just sent me a letter and told me my limit had been lowered or the card had been cancelled - the letters even stated that the companies actions would not hurt my credit rating. :wtf:

[Gormy Cuss]

4. That probably means that they're cutting back on nearly everyone.

Keep those letters as proof that it wasn't punitive. I have a feeling that many credit-worthy customers are getting the same letters these days.

[customerserviceguy]

9. The answer to that is simple

they just weren't making enough money off of you. Big commercial banks thrive on people carrying large balances, paying minimum payments, and raking in bushel baskets of interest payments. The way to avoid all of that--get a card issued by a local credit union. They exist to serve their membership's legitimate needs, not to make boatloads of money from sheep.

[boomerbust]

2. My limit was cut to 0

after I filed for bankruptcy. That got their attention!

[pattmarty]

3. I have NEVER in my whole fucking life (61 yrs) had a credit card.

I ain't a rich fuck either, never made more than 45K per year in my life. Credit cards and other "lending institutions" plus ALL insurance companies are the true capitalist vultures. It's because of these "institutions", Wall st and NO GOVERNMENT regulation at all that we're in this fucking mess.

[proud2BlibKansan]

6. I don't have any credit cards either

It's the only way to go nowadays.

[DebbieCDC]

5. Same thing happened to me with a Chase Mastercard

I'd had that card at least 10 years. Never a day late or a dime short on payments. NEVER. Sterling payment record on all my other accounts. I had paid that sucker off in full I don't know how many times. In fact, had just paid it down to about a $200 balance (on a $5,000 credit line), when one Saturday, out of a clear blue sky, I went to the use the card and it was declined. Knowing this HAD to be a mistake I called Chase immediately. I was told "Oh, we lowered your limit". "Why?" I asked. "You use your card too much. We sent you a letter explaining it". Well I immediately told them to stick the card up their ass. I wrote a blistering letter to Chase HQ. By the way, 4 months later I have yet to receive their "explanatory letter".

The happiest day of my life (practically) will be the day I finally pay off my remaining cards for good. Once that day comes (hopefully next year sometime) -- NEVER AGAIN. It's indentured servitude. I am sick to death of these banks and their hidden fees and (what should be illegal) interest rates. Damn them all to hell.

[L0oniX]

7. My Chase MC is at a fixed 7.9 % and $5k limit ...no problems here.

[L0oniX]

8. Hell ...I just got a new $10k MC but I am not surprised at the move...

because the credit card companies offered too many cards per individual to the point where the total credit limit of the combined cards exceeds the yearly income of the individual. I don't blame them for lowering limits if that is the case.

[closeupready]

10. I actually think this is good, as long as the consumer isn't blamed.

Credit has been too easy, and people have been hurt.

[Joanne98]

11. I hate Chase!