Creditors Starting to Lower Credit Limits

[justbroke]

It seems that creditors have started to lower credit lines in anticipation of a massive recession.

CNBC has an article "Card issuers are cutting credit limits without warning" and I can already see the affects.

If the 2008-2012 recession is any indication, credit card companies will continue to automatically lower credit lines that are not in use. For example, I have an Amazon Line of Credit for $10,000. They just lowered it to $1,000 in April. I never really use it, and nothing changed in my credit profile. A gasoline card, which has a $5,000 limit, was lowered to $500. Both companies claimed that I had "sufficient" credit and that it "shouldn't" impact me.

https://www.cnbc.com/2020/04/23/card-issuers-are-cutting-credit-limits-without-warning.html

[sophieanne]

Good article for everyone to be familiar with. I put a note in the other thread where this was being discussed. American Express dropped my limit than put it back up. I was not surprised when it happened but was surprised when they put it back.

[Carmella]

Thanks for posting this article. I can see why the limits are being lowered, but it would have been courteous to tell the consumers first.

[sophieanne]

Carmella - like before you’re at the cashier trying to make a purchase😀

[flashoflight]

The one advantage to being in chapter 13 is that this is a non-issue for the most part. The limits imposed by the banks and the trustee are very low. And the temptation to run up the card is very low because any new debt payments on a very tight budget could derail the chapter 13 payment plan.

[NoMoney30]

I'm keeping an eye on mine... I have a 35k card with PenFed and then 3 others at 15k ... really hoping they don't touch them. But I would understand if they did.

[Carmella]

The one advantage to being in chapter 13 is that this is a non-issue for the most part. The limits imposed by the banks and the trustee are very low. And the temptation to run up the card is very low because any new debt payments on a very tight budget could derail the chapter 13 payment plan.

I have been confused by this and I have not applied for any cards we are just over the 2 yr mark in 5 yr chapter 13. My husband and I can both have $500 in credit. How do you get a card that is only $500 especially when applications don't give you a number to call. Or does it mean that you might have $1,000 or $2,000 credit limit, but you charge no more than $500???

[justbroke]

For most creditors, you can always call customer service and have your credit limit reduced. You could also do what you suggest which is to never exceed the Trustee/Plan set amount of $500. The purpose of imposing such a limit on any new credit without approval, is to reduce the chances of your plan failing.

You're lucky to be in a district that allows a preset amount of new credit without permission. In Florida, Chapter 13 plans generally disallow any new debt without Trustee and/or court approval.

[Layla55]

I got a letter of congratulations from mission lane of a credit increase of 100.00!! lol