Why did my credit card lower my spending limit?

Q. I had a credit card with a $3,000 limit but no balance. I kept it that way for a year while I worked to pay off my other debts. After 12 months, the credit card company lowers the credit limit to $500. Why are they so concerned about being out of balance?

— Borrowers

A. You were one of the many who noticed during the COVID pandemic that there were credit companies. decrease available balance to many customers, even those of good standing.

It was because companies don’t want to see people, as they enter into financial difficulties, charge their cards, which they eventually can’t pay.

It can be sad to see you credit limit fall for no reason.

“Under the Fair Credit Reporting Act, credit card companies have the right to reduce the limit whenever they want,” said Karra Kingston, a bankruptcy attorney in Union City. “A lot of times the lender lowers the limit when the economy is bad or when the buyer misses the money.”

It is an attempt by the card company to reduce its risk.

Fortunately, when a credit card company lowers a credit limit, it’s not final, he said.

Credit companies can lower limits if they feel the card not used enough, your credit score has gone down or they decided to change their line of credit, he said.

Just ask your credit card company if your limit will be increased. You may find it open to discussion – especially if you plan to use the card frequently.

Email your questions to Ask@NJMoneyHelp.com.

Karin Price Mueller wrote the Composting columnist for NJ Advance Media and the founder of the NJMoneyHelp.com. Follow NJMoneyHelp on Twitter @NJMoneyFesoaani. Search NJMoneyHelp on Facebook. Sign up for NJMoneyHelp.com‘s weekly e-newsletter.

Leave a Comment