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Where before -when credit was loose- cc companies would allow you to have high limits while not using them (or under using them), they are now contracting and dropping the limits and/or canceling the lines of credit alltogether. I had lines of credit at Lowes, Home Depot, Ashley Furniture, and Target that were all terminated because I hadn't used them in a while (or at all). My major cc's haven't done this yet and my limits haven't changed....but I'm kinda waiting on it to happen.
My dh and had a card w/roughly $13,000 balance, out of total credit line of 15K, on a special low interest rate. The low rate period expired, and for about 4 months we were paying about $350, w/$250 going to interest, with a few bigger payments in between. Finally we found a way to pay off the whole card, using some extra money we had on hand and my DH's bonus.
So we paid it off completely, which I thought was going to be a good thing for DH's credit, and then I get a letter from the company, saying the line was reduced from $15,000 to $1,000. (We have two other cards from them due to their buying out other companies.) While I understand where they are coming from, I was still pissed that they did that!
I hear that even if you don't pay off the card, say you have a $5,000 balance on a card w/a $10,000 limit, they are also shaving the limit down to just above what you owe on it.
It is going to be very hard times indeed for those leaning on their credit cards to get them through tough times, and I think many people are doing this. (I know we did for a time, never a good plan but sometimes cannot be avoided)
My dh and had a card w/roughly $13,000 balance, out of total credit line of 15K, on a special low interest rate. The low rate period expired, and for about 4 months we were paying about $350, w/$250 going to interest, with a few bigger payments in between. Finally we found a way to pay off the whole card, using some extra money we had on hand and my DH's bonus.
So we paid it off completely, which I thought was going to be a good thing for DH's credit, and then I get a letter from the company, saying the line was reduced from $15,000 to $1,000. (We have two other cards from them due to their buying out other companies.) While I understand where they are coming from, I was still pissed that they did that!
I hear that even if you don't pay off the card, say you have a $5,000 balance on a card w/a $10,000 limit, they are also shaving the limit down to just above what you owe on it.
Consider it from the creditor's perspective - you had used most of your credit limit on that account, apparently made little progress in making a dent in it for however long the promotional period was (6 months? 1 year?), and seemed to be barely keeping your head above water after the promotional rate expired. Then you paid it off suddenly. For all they know you simply transferred that balance elsewhere and are still holding it. They deem you a bad risk and flatten your credit ceiling to mitigate that risk. They aren't being completely unreasonable, right?
If you actually would like to continue using the account but find the new limit ridiculously low, you might try calling them and asking nicely to have it increased to a workable limit. (Or if you just don't want that huge hit in your available credit but have no intention of making any further major purchases on that account, it would still be much better for your rating to regain as much of that limit as possible. )
I was recently able to talk first level customer service at Citi into lowering my rate to something that is currently quite competitive, without canceling the account. They also offered (and I accepted) a very low promotional rate for new purchases and increased my limit. I just remained cool and polite and simply stated the truth which is that I did not want to close the account, but that I would no longer be able to use card the same way (short term funding for unexpected expenses) with this new rate in place.
My utilization has been low and use of revolving credit sparing, so I don't know how well this technique will work for you or others, but it's worth a shot. The key is to be excruciatingly nice to the CS agent who has been screamed at constantly by irate customers in the last few months.
I've been reading the threads about how credit card companies are screwing their good customers by upping interest rates and lowering credit lines, but this has really got me steamed. I've received some letters about my interest rates going up even though I've never been late on a payment, always pay more than the minimum; in fact except for a couple cards that I've used to make some home repairs (with special no interest financing) I pay my balances off each month. I wasn't happy, but since none of the cards that had raised the rates have a balance on them, I figured whatever.
See my thread about why credit cards are a scam. When you play with snakes you get bit. Pay off the credit cards and don't use them anymore. Tell the cc companies to go shove it!
You only need one credit card and you need to pay it off every month. You might be responsible with money but even the best fall down sometime. That is when the credit card companies will lock you down.
My credit limit on the only card I really use is 50k... just check... still a limit of 50k... rates still the same... benefits still the same... I just used it yesterday for $100... and the limit is still 50k... I could probably increase it higher if I wanted to... one thing, my credit is stellar.. and all my debts are paid each month with the exception of one credit card which has 0% APR for life... I have the money to pay it off but I am reminded its 0% apr for LIFE... overall, my credit cards are doing fine...
I've been reading the threads about how credit card companies are screwing their good customers by upping interest rates and lowering credit lines, but this has really got me steamed. I've received some letters about my interest rates going up even though I've never been late on a payment, always pay more than the minimum; in fact except for a couple cards that I've used to make some home repairs (with special no interest financing) I pay my balances off each month. I wasn't happy, but since none of the cards that had raised the rates have a balance on them, I figured whatever.
Well, I took one of my cards that had a $5,000 credit limit with me on a short vacation. I flew out of Baltimore this morning, planning to put all of my travel expenses on that card and then pay it off when the bill comes in. I've done this a number of times. On this particular card, I was online just yesterday, making sure my last payment I made just last week had posted, that once again brought my balance down to zero. Everything's fine- balance zero - $5,000 limit. And this creditor had not advised me of any rate changes or any other issue with the card. No letter or other correspondence - nothing.
I fly into Jacksonville Florida - over 800 miles from home - go up to the car rental desk to pay for my car - the charge is declined. The agent runs it again - $375 total charge - declined. Luckily, I had another card in my wallet so I used that to pay for my rental, and then called the credit card company.
Their response? They apologize, but due to the current credit situation they reevaluated their customers' credit profiles, and unfortunately my credit limit had been reduced from $5,000 to $300. What the h**l?!? Here I am almost a thousand miles from home, no warning, nothing, and they reduced the credit line to a crummy $300. What is that? Who even needs a credit line of that amount. I was steamed!
As I said, luckily I have other cards, and luckily I had them with me. But this really ticks me off. What a way to start what was supposed to be a few days off to relax a little.
You might want to think about cancelling that one.
If you want/like the protections of a credit card over debit, a way to artificially increase your credit limit is simply to carry a "credit" on your credit card. That is to say, if you have a $1000 limit, and a $0 balance, paying $1000 on your credit card will essentially give you $2000 of available credit. I do this from time to time, pre-pay my credit card that way I don't have to worry about paying $0.01 too little and them charging me interest on the average daily balance of my card.
I got that notice on both my cards. What's weird is that the purchase rate only raised on 1 of them. the other one the purchase rate stayed the same. I just did an online payment to bring my balance down to zero on the one that my puechase rate went up. Once it clears my bank I'll be calling Capital One and canceling that account. Since the limit is only $500 and I'm not going to be making any major purchases for a couple of years it won't matter if it brings my credit score down a few points or not.
I canceled my CapitalOne CC online weeks ago and recently got a letter from them, luckily I read it, I had to call them again. I talked to an automation with phone bottons for them to cancel it... but it's not gonna cancel til May, 3 months from now, weird.. They want to give less and keep loyal creditcard holders at the same time. The letter said something like "Due to recent economic blablabla...." followed by a freaking word-problem of %s and fancy words that sounded like b.s.
If you want/like the protections of a credit card over debit, a way to artificially increase your credit limit is simply to carry a "credit" on your credit card. That is to say, if you have a $1000 limit, and a $0 balance, paying $1000 on your credit card will essentially give you $2000 of available credit. I do this from time to time, pre-pay my credit card that way I don't have to worry about paying $0.01 too little and them charging me interest on the average daily balance of my card.
They will issue you a check for the amount of the credit. It happened to me recently. I had a credit of about $7 from a returned purchase. They just sent me a check even though I did not ask for it.
I just received a nice notice from Capital One that reads:
"Due to extraordinary changes in the economic environment, we're reviewing our existing credit card accounts. Having considered these economic conditions, your account's current Purchase rate, and the length of time you've had this rate and account, we will be increasing your Purchase rate. We're also raising your Cash Advance rates."
How nice of them - they did not, at least that I know, reduce my credit limit arbitrarily too.
I called the company to speak to two reps, and then two supervisors, to find out why my account terms had been changed - I have had the credit card for 8 years and also have never been late on a payment - and pay it off in full every month. Their blather detailed how they look at accounts as a whole and did not differentiate on any single account holders, so they were raising rates across the board. They did not seem to see anything amiss with lumping a steady customer in with those that are delinquent; nor did they think it unreasonable that they preferred a POSSIBLE payment of 29%-plus on someone that has a less-than-stellar credit history over a guaranteed 3% - 4% of all my purchases.
I guess they really want that 29% of someone else's business, because there was no negotiation involved. I let them know that no further charges would be made on that card, and I would be canceling it as soon as possible. I got those cool "cricket noises" from the other end of the phone.
I can't wait till some of those wonderful folks that lobbied and "won" for that great credit card protection bill that doesn't go into effect until next summer start to get some of these notices. Let's see... did any of them think that perhaps these types of slick maneuvers were not going to happen in the 12+ months until the regulations take effect? Wow, maybe some of the "savings" that people are getting from the stimulus bill can be used to pay the extra now due on the raised credit card interest rates? Oh, wait, that money was for jobs and to give people some "spending funds"... wow... it's going to end up sitting in the banks with all the rest of the bailout funds to date.
Imagine that.
I have four Capital One accounts and received four of those very same notices! There's no way in Hell I'm going to pay 29% or more interest rate - no way!!! I have a small balance on one of those accounts. I am going to pay it off and close all four accounts.
I also received a notice from Citibank yesterday telling me they are lowering my credit line. I might have to cancel them too.
It makes no sense - I have an excellent FICO score and have never been late or delinquent on a payment. I have been seriously thinking about just paying cash for everything - even if it means I have to go to the ATM every couple of days. The credit cards were convenient, but now they're just a PITA.
Last edited by Twinkle Toes; 02-26-2009 at 06:13 PM..
Reason: Beginning letter of a sentence was not capitalized.
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