Anyone else had their credit card limits slashed for no reason?

[funkyab 10+ year member]

So....

i have several credit cards, two being American Express regular and gold cards.

Today i get notification that my credit limits have been reduced. One from 16,000 to 4,100 and the other from 8,000 to 1,600. Was only using 3,300 of the original 24,000 dollars of available credit.

This was of course very surprising. Never had a late payment, been an AMEX customer for 7 years, no recent activity on my credit reports or with my FICO score.

Needless to say i am very pissed, especially considering the hefty fee i pay each year for the "privdiledge" of using the cards.

I spent some time reading about this on the internet today and came accross some very interesting things. Maybe this warning will help others around here, especially since lowering a credit limit will most likely negatively affect your FICO score.

http://www.foxnews.com/story/0,2933,373230,00.html

http://www.totalnoid.com/2008/03/16/recession-forcing-american-express-to-target-profiles-to-decrease-credit-limits/

Click to read more...

 

[fbi90909 5,000+ posts]

if it affects your credit score you can always fight it.

 

[funkyab 10+ year member]

if it affects your credit score you can always fight it.

One would think, however in a situation such as this there would really be no way to fight it. A good percentage of how your FICO score is calculated is by your debt to credit ratio. since CC companies can apparently change this at will and they are the very ones creating your DTC ratio,, what can be done. There really needs to be some type of consumer protection. I have busted my ass to have very good credit and a good FICO score and now im in a spot where my score is going to go down for no reason.

Interesting how they are now factoring where you shop or where you live in creating your credit profile.

"If you shop at Walmart and use your AMEX card, AMEX software will mark you as a potential problem. It really is not based on your credit score or your history with AMEX. It is simply as “profile” and if you fall in this “profile” .. AMEX will reduce/eliminate your credit line. Walmart evidently is in the profile…""

http://redtape.msnbc.com/2008/10/how-credit-card.html

""Lower limits can hurt consumers in myriad ways. Consumers with a balance that’s over the limit -- even if that occurs as a direct result of a shrunken credit limit -- face over-limit fees and can see their interest rate raised to the "default" rate of 32 percent or more. Lower limits also hurt credit scores. Credit utilization is a key component of credit scores, accounting for about one-third of the magic formula that generates that score. Consumers who carry a credit card balance that’s more than 30 percent of their credit limit are punished by the credit score formula, Hardekopf said. Credit score expert John Ulzheimer suggests an even more agressive goal -- he says cardholders should try to keep their credit usage down at around 10 percent of their credit limit.

Tim Westrich, who researches credit card debt at The Center for American Progress, said cardholders won’t really know for some time what to expect.

“We just don't because we've never been in this situation before,” he said, adding that he is particularly concerned about small-business owners who use credit cards to fund weekly operations.""

 

[deaf tones 10+ year member]

pwnt.

 

[dman4486 5,000+ posts]

shoulda got a visa:

 

[dbman150 5,000+ posts]

my American Express dosnt have a limit

 

[RE_XXX]

Thats such ********. Had a friend of a friend who was getting double charged for his credit card for over 3 years. his new girlfriend (an accountant) found the error, They called them and stated they will be suing for 500,000 dollars and will be going to the press and taking every step they can to make sure people end up behind bars. Credit Card company gave them another deal.... more money so no press would be involved. Lets just say you guys never heard about it and he never will have to work again.

 

[hndavfr 10+ year member]

so, you pay a yearly fee, AND they mess with your account status? Does not sound right to me....

 

[04silverz 10+ year member]

i think one of my cards has lowered from 8000 to 7000, but then again maybe its always been 7000. my parents say theirs has lowered, but they dont care as they dont use them much and when they do they always pay them off in full every bill cycle

 

[vgeek 10+ year member]

There was a thing about what funkyab mentioned in his second post on Msnbc a few weeks ago about a man who used his Amex for his business travel and only made purchases for tickets and at Target, then next thing he knew they closed 3 of his 4 accounts and reduced the limit on the remaining one, without any notice or reason. Perfect payment record and all of that, but they said he was a "risky customer" simply because of the stores he shops at. Why you have to love credit card companies even more.

 

[bmxbikes 10+ year member]

Yes they can cut your limit for no reason. If you have several cards or a substantial amount of revolving debt, debt that you carry from cycle to cycle, then they feel its a risk for you to have that large of a credit line. It is a shady practice, and I hated having to explain it to people when I was doing the Bank of America **** but eh it happens. Not a lot you can do about it.

 

[WhoSayWho? 5,000+ posts]

Yes they can cut your limit for no reason. If you have several cards or a substantial amount of revolving debt, debt that you carry from cycle to cycle, then they feel its a risk for you to have that large of a credit line. It is a shady practice, and I hated having to explain it to people when I was doing the Bank of America **** but eh it happens. Not a lot you can do about it.

Well, I think that it is happening now just because of credit tightening. I don't think it necessarily has to do with a change in the cardholder's creditworthiness. Which is even more shitty, but now that they got this depression going on....

 

[funkyab 10+ year member]

There was a thing about what funkyab mentioned in his second post on Msnbc a few weeks ago about a man who used his Amex for his business travel and only made purchases for tickets and at Target, then next thing he knew they closed 3 of his 4 accounts and reduced the limit on the remaining one, without any notice or reason. Perfect payment record and all of that, but they said he was a "risky customer" simply because of the stores he shops at. Why you have to love credit card companies even more.

Fortunately i have several other revolving accounts. Obviously cant count on AMEX anymore. From my reading though, other banks are stepping up their credit limit slashing.

I read somewhere that frequent alcohol purchases can signal to the cc company to cut your credit as frequent alcohol purchases can indicate a health problem that could have financial repercussions. That *****. I have used my card every day or couple of days to pick up wine/beer for dinner.

I think this is what you might have seen read.

http://www.msnbc.msn.com/id/27055285/

Among other criteria, cardholders are seeing limits reduced because of where they live, where they shop and who holds their mortgage.

 

“Absolutely unbelievable!” said Jesse Gilleland of suburban Washington, D.C., who says revisions of his American Express accounts and credit limits, at least partly for those reasons, could force him to close his once-thriving computer-consulting firm.

 

A letter sent to Gilleland by American Express, one of the nation’s largest credit-card issuers, includes these reasons why the spending limit on his Platinum Card was reduced:

 

“Our credit experience with customers who have made purchases at establishments where you have recently used your card.”

“Our analysis of the credit risk associated with customers who have residential loans from the creditor(s) indicated in your credit report.”

Credit-card experts and consumer advocates say that while such practices have been rumored for some time, this is the first time they’ve seen them cited as criteria for a credit limit reduction.

 

[Louisiana_CRX 5,000+ posts]

Its been a while since I have even seen a new credit card //content.invisioncic.com/y282845/emoticons/frown.gif.a3531fa0534503350665a1e957861287.gif

 

[bigbangtheory 5,000+ posts]

I pretty much have most my CC's maxed out.........yeah for me!

Taking care of that this tax season, hopefully.

All I know is, they can not lower mine, lol!

 

[funkyab 10+ year member]

I pretty much have most my CC's maxed out.........yeah for me!
Taking care of that this tax season, hopefully.

All I know is, they can not lower mine, lol!

While continuing to read about this limit slashing business, i read something else interesting. Some people had their limits slashed to just above their balance. next time they made a 500 dollar payment for example, the limit was lowered an additional 500 dollars, essentially slowly pusing you out the door. This is soo fvcked.

the worst part of everything is the negative effect on your FICO score. I can understand if lenders want to be dicks, they can because it is their money, but to damage your credit rating is not fair, especially it will decrease your chances of getting money from other lenders.

I spent the last 10 years establishing very good credit after messing some things up when i was a young guy. My AMEX accounts and my histlry helped with this. Now by doing what they are doing they are essentially saying, yea buddy, we will just leave you where we found you.

Probably the worst thing about this is the effect on my new wife. She is norwegian and we moved back here to my home after working in africa last year.

She of course had no credit history being a new resident but was fortunate enough to start out with good credit based on me adding her as a joint on my current accounts, which helped her to quickly qualify for her own revolving lines of credit. Since our credit scores are linked, she is going to suffer as well.. AMERICAN DREAM WIFEY!!!

 

[azimuth 5,000+ posts]

credit card companies are the next in line to need a bail out