Reduced credit limit?

[pete3799]

I got a letter from my credit card Co. that says.....

"....that a significant portion of your available credit limit is not being used.

Based on your current limit usage, we've decided to lower your credit limit from
$29,950 to $23,240, of which $6980 is available for cash advance."

My questions are.... why did they do this (seldom charge over $1K / Mo. and always pay it off when due) and would this affect my credit score?

Anybody have this happen?

[A930Rocket]

I’ve heard of it but have not had it happen to me. I think the weight changes your credit score is the percentage if used changes. If you use 10% of a $20,000 limit, your credit score is effected less, than if you use 10% of a $10,000 limit. Or something similar to that.

[rfuerst911sc]

Had that happen to me about 18 months ago . Basically they reduced my available credit from 30k to 10k . No real reason given but I think they finally realized I was retired . Ok that's fine . A 10k limit is WAY more than I ever will use .

Whatever amount I charge gets paid in full at each billing month . It's all good .

[Evans, Marv]

Pete. I'd call customer service and ask - that is if you can talk to a real person or go to the local office. Seems like a minor action to me as far as a credit card company is concerned. May be some kind of strategy on their part to get customers to use their card more often - for those who hold multiple cards. I only have two credit cards, but have not heard of this kind of thing.

[JackDidley]

I am expecting a similar cut. I have 4 cards and a couple I may use to charge $10 each month. Even though I pay all cards off each month I sort of expect to be credit reduced or even cancelled. The only downside will be a lower credit score. For some reason that bothers me. Its sort of a sense of accomplishment to keep my score above 800. At the age of 70 I do not see myself taking out a loan or needing credit for anything other day to day life but I still need that 800 score.

[pete3799]

The lower limit doesn't bother me just curious as to why they did it. May be (as post above) that they figured out i'm retired now.

Been with the same cc company since 1984. Only card i own and have never gotten a cash advance.

[berettafan]

I suspect it's a bit more ominous than what you guys have suggested.

[KFC911]

^^^^ They're just looking out for Pete .... thought he was fixin' to buy a coupla Bitcoins on credit ....

[Por_sha911]

Banks are accountable to the Fed to have a certain amount of available liquid assets to cover the credit lines they give. It costs them to not be able to put those assets into play by loaning them to generate income. Reducing your credit line gives them more to loan to someone else who will pay interest on the loan. Its not a lot on your side but do that to 5 or 10,000 others and it adds up.

[stomachmonkey]

^^^^^

You are not using it so you are loosing it.

[KFC911]

I rarely used my CC ... back when I had one. Never charging more than a K or two, and always paid off immediately. Don't remember what my limit was.... Mebbe 5K, and then they increased it by 25 without me asking .... Didn't like that one bit either .

[RANDY P]

They do that to reduce liability. They know it's not needed. Call them and complain, they may give it back. AMEX will.

rjp

[Bob Kontak]

Originally Posted by RANDY P

They do that to reduce liability.

+1

Suspect there could be a number of reasons to reduce that liability. I don't think they isolated OP. A mass claw back as noted.

[MBAtarga]

https://www.consumerfinance.gov/about-us/blog/new-report-explores-the-impact-of-credit-card-line-decreases-on-consumers/

This report is from Jun 2022 - the lead in paragraph:
When credit risk is on the rise, such as during an economic downturn, credit card companies may look at reducing consumers’ available credit limits to prevent against losses. Credit card line decreases are an industry practice where a company cuts a consumer’s credit limit on an existing account. A consumer’s available credit can disappear, sometimes without warning or subsequent explanation.

[osidak]

I just got a letter saying because I haven't used the card in a while they were going to close the account - cut me check for the pending reward dollars.... though if I use it before some date in December the account would stay open.. Oddly it is the card I have had the longest

[Baz]

I use all my cards and always pay them off when due.

I also pay cash for stuff.

Never write checks. Never use a debit card.

Pay all bills online.

I have 2 credit cards I use several times a year just so they don't get cancelled.

The other 2 I use every month. One is tied into my Amazon account. The other I use for gas and misc. They are both cash back cards.

At the end of the day I am still subject to whatever the card companies want to do.

I like having them just in case. You never know when you may need them.

[GH85Carrera]

Originally Posted by Baz

I use all my cards and always pay them off when due.

I also pay cash for stuff.

Never write checks. Never use a debit card.

Pay all bills online.

I have 2 credit cards I use several times a year just so they don't get cancelled.

The other 2 I use every month. One is tied into my Amazon account. The other I use for gas and misc. They are both cash back cards.

At the end of the day I am still subject to whatever the card companies want to do.

I like having them just in case. You never know when you may need them.

Similar to me.
I have a debit card I use for most small local purchases.
I have a personal credit card that I use for my Amazon shopping, and all on line shopping, and larger purchases.
I have a "business" card that I only use for my company purchases. We have a lot of software that gets monthly or yearly renewals and lots of other needed items.
We had to talk to a supervisor at the credit card company to get them to understand that with an airplane it is very possible to fill up before take off with 300 bucks of fuel, be in Nebraska and get $700 in fuel, and then to Colorado and land at home and pump in $700 again on the same day, all legit. They still have a limit of $800 and we have to stop, and start again when the airport we land at is expensive gas.
We have been close to 25 grand in one month, and still pay it off at statement due date. No interest is ever paid.

It is funny (not really) when we started our business finding a bank to give us credit was a challenge. Now I get several proposals per week for low cost loans. Eff em all, we are not borrowing any money.