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Banks Lowering Consumers' Credit-Card Limits
Market chaos has many banks reducing credit lines on consumers' credit cards.
Start complaining to the Financial Services Committee - either to them diretly, or your state representative- you can do from this site. Not sure how much good it will do, but checked out a couple other starts and many others are doing the same- specifically naming American Express
Are there any l...(Read more of this comment)
I obtained a copy of my credit report from Experian and found that there were NO negatives on my credit history. Today I rec'd a phone call from AMEX; they were calling to let me know of their 'credit decision' and had hoped the call would arrive before I got my letter. I told the caller of my dissapointment with AMEX, he said he would pass my comments on, but I don't expect that will make much of a difference. There is no such thing as a 'personal banking relationship' these days. If consumers hit these guys back in their wallets as they're doing to us... and maybe if ...(Read more of this comment)
I don't think this is fair to lower the credit card limits and also raise credit card interest rate so high to me. Even though I have high balance in my cards, I have good past records over last 20 years. Prompt payments, never late.
Especially at this economy, this would only put more burdens to me. I don't think this kind of acts can help our economy gets better. It may get even worse. There is no win-win situation for both. The banks should reconsider of doing this.
Who creates this financial crsis. BANKS. BANKS. Now they want us to pay for their own mistakes. This is totally not fair.
I just want to voice out my angry. Hope someone can relay this message to related departments. I think I'm not the only one affected here.
READERS, SMARTMONEY NEEDS YOUR HELP.
I'm Kelli Grant, SmartMoney's senior consumer reporter. I've been following the discussion here and am doing more research on credit-limit cuts.
But I need your help. Our readers are an invaluable resource in exploring this subject. If you've recently had the limit on one of your credit cards reduced, please get in touch with me. You can email me at kgrant@smartmoney.com.
Kelli B. Grant
Senior Consumer Reporter
SmartMoney.com
kgrant@smartmoney.com
As for me I find it insane that the mega economic machine of America drives people so hard the it drains to life right out of them. Many of the successful are so simply because they worked their ass off to get there. All along the way though for every hour they burned the midnight oil ,good old American Government was right there searching for a way to better tax those earnings. It takes a large sum of cash to fund a get even war, 700 billion dollar gift to Wall Street, Possible 25 to the big automakers etc. The Government off course has always had a history of helping out the undeserving by simply putting it on the back of the working class. They say...(Read more of this comment)
MEMBERSHIP HAS ITS REWARDS
CLD/FR. GOT YOUR 4506-T READY?
AMEX IS SUB-PRIME. FR/CLD/TOTAL ACCOUNT CLOSURE
I LOST 91% OF MY LIMITS.
NEVER LATE. ALWAYS PIF.
BEST OF BREED?
Amex just did this to me. One business day after I used one of their convenience checks. I left a $1500 buffer on my balance above the convenience check. They lowered my balance by the amount of the check + $1300 leaving me with $200 wiggle room, a returned check fee, and egg on my face.
The odd thing is, the date that the limit was lowered, was the date that AMEX was approved to become a bank. My understanding, according to this post from the OCC:
http://www.helpwithmybank.gov/faqs/credit_terms.html#drop01
Is that banks must give 15 days advance notice before changing terms. I suppose technically AMEX was not yet a bank when they did this too me. But it sure was shady on their part to execute this credit limit reduction like this.
I've no doubt they were well within their rights to do this. And yes, it's my own damn fault for taking the bait that they set out. But this is stretching the limits of business ethics in my opinion.
If there is a...(Read more of this comment)
In the mean time do an internet search for class action law suits against American Express - there appears to be a history here...
letter copy :
Dear American Express;
I hope this email contact finds you all well in this time of economic turmoil. It is with some regret yet full understanding of your situation that I send this email. I am fully aware that given the current ecomic market in the USA your organization as I am sure others have been forced to make some hard and fast decisions. I as recently notified of your having reduced the credit limit on my Business Managment Account. I am further aware that this action is in fact broad throughout the scope of your cardholders. This is evidenced by the broad number of posting by disgruntled Amex cardholders,appearing on many of the Internet financial websites. As stated though I realize your move is in effort to evade further damage than that whic your org...(Read more of this comment)
This appears to be one of those little flaws that no one discovers until a certain incident happens. Well it just did, the economy has taken a nose dive. If a credit card holder is not being responsible with their credit then the credit card company should have the right to control their losses by whatever means they have to. However, I do not care what is written in their contracts, they should not be able to cause an individual that is being responsible undue hardship. Taking away the operating line of credit from a small business which are so important to the economy right now, leaving people that are thousands of miles away from home without the means to return, or taking an unjustified action that will effect a person's credit score should not be allowed, especially when it is for their own personal gain. This is not just spilling hot coffee on your lap. My credit score has dropped 20 poi...(Read more of this comment)
Total Compensation: $ 14.79 M
KENNETH I. CHENAULT, Chairman and Chief Executive Officer, American Express Company, April 2001 to present; Chief Executive Officer, January 2001 to April 2001. Director, International Business Machines Corporation. Member, the World Trade Center Memorial Foundation. Trustee, NYU Hospitals Center and the New York University School of Medicine Foundation.
Hide Full Profile
CompensationSalary $1.24 M Bonus $6.00 M Total Cash Compensation $7.24 M Other Annual Compensation $— Total Annual Compensation $7.24 M Long Term Incentive Plan $0.00 All Others $7.55 M Total Compensation: $14.79 M
Board Membership/Committee AssignmentsCommittee Name Role
NOW DOESN'T THAT JUST PISS YOU OFF!!!!
YOU WOULD THINK THAT A PERSON WITH A PAID OFF HOUSE (BOUGHT WITH CASH 5YRS AGO)AND CAR WITH NO LEINS ON EITHER,A 28 YR HISTORY OF GOOD TO EXCELLENT CREDIT, CASH HOLDINGS OF OVER 56,700 AND A 720 FICO WOULD BE MORE RESPECTED AND TRUSTED....BUT NOW ITS SLASH AND BURN THE CARD HOLDER. BUT THATS OK CAUSE I WILL REMEMBER WHO STANDS BY ME AND WHO HAS NOT!!! OH BY THE WAY GUESS WHO RAISED MY CREDIT WITH OUT ME ASKING--HOME DEPOT. YOU THINK THEY WANT MY BUSINESS?
Do a search on the above name.
You will find that he is CEO of American Express and one of the highest paid men in the country. Over 50M in compensation.
Now here's a new twist:
I use AMEX for EVERYTHING, to the tune of several thousand dollars a month. I admit I enjoy the float, but I always pay them on time. My next payment is not due until 11/29. Today (11/11) they called me at work and demanded payment. I explained that my payment wasn't due until 11/29, but they 'encouraged' me to pay them now. I did, to the tune of $4,500. I fully expect my 'limit' to now be reduced accordingly.
I have no use for AMEX anymore. I have to admit that I do like the perks of the Platin...(Read more of this comment)
I tried for over 24 hours to reach American Express regarding this. When I was finally able to contact someone I was told to just pay off the card and then I could use the card to pay for the rental car. After explaining just how ridiculous this statement was and 'talking' to this representative a little longer she agreed to give me a temporary credit line increase. However, this increase would have put me over my limit and I would have been charged with over limit fees. I am quite sure that my 0% interest rate would have disappeared also. Not to mention the impact that would have had on...(Read more of this comment)
Just last night my sister went to use her AMX card at CostCo and it was denied. She got home and called American Express (1/2 hour on hold) to find out that her cards limit was dropped to $600 (just above her balance) from $16,200....(Read more of this comment)
Here are my additional tips:
1. Don't change your charging pattern. Using credit cards at Starbucks or Peet's all of a sudden signals that your credit may be shaky and this can lead to a credit limit decrease
2. Don't stop using your credit cards altogether. Some people are reporting limits lowered for lack of use.
3. Don't use credit cards for flags for risk. ...(Read more of this comment)
The credit card companies, similar to the insurance industry, are blood-sucking leeches. Stay as far away from them as you possibly can… like
I like to know that if I withdraw or purchase something and the money to cover is not in my account I will be denied the transaction instead of it going thru only to find out a few days later that I’m being charged $35 overdraft fee. Credit card companies will try anything to make money like the 20% interest isn’t enough. like
All of our credit cards have done the same, either increase rates or lower available credit. Our family has chosen in those cases to not charge anything on the card in order for the rates to stay the same. We have not been using any credit cards for over a year now, so this agreement with them is fine by us. We are building our emergency fund and paying off the debt as we can. Once our emergency fund is funded we will start knocking those balances off one by one, till they are all gone.
Yeah. My inlaws just made $18k in payments to pay off two different Bank of America cards. As a thank you, B of A closed the accounts. It sucks because on the advice of their financial planner, they did this because the planner said they could use these 2 cards as their emergency fund.
If you’re worried about it, just make your “extra payments” to a savings account instead. When you have enough money to pay the debt in full, do it. No worries about limits & your credit score.
My thought is we should all write our congressmen and start demanding that FICO score calculations be made public. FICO scores were developed after the credit bureaus were made to PROVE that their info was correct. They could no longer put the burden of proving the info INCORRECT on the consumer. So they came up with FICO. It is just another indicator of the total insanity of the entire system. The greed and loss of integrity of these companies makes me sick!!!!
@Nadia I don’t think it matters what your credit score is. Mine is above 720 and so far, so good. My brother’s is above 760 and Citibank tried to raise his to 22%. No late payments and no missed payments. He was able to fight them off since he has both business and personal accounts with them and a significant amount of money in their bank. Sure their terms say they can do it so right now I am prepared for the axe falling. I plan on transferring money to another card that I have kept at a zero balance if Chase does this to the card where I have a balance. I think if you are buying a house you can make a case for a better rate if you have paid down your debt. That is where we should focus before adding a large debt like a house. It’s just the responsible way to do things in these times.
I doubt the recent credit card changes are specifically targeting those who are in the process of reducing their debt. I believe it’s pretty much happening across the board. My fiancee and I both have capital one cards and the interest rate was recently hiked up on both of them. Her credit score is in the high 700’s, where as mine is barely hitting 700. Neither of us are carrying a balance, so we could care less. I don’t think anyone should limit their debt reduction efforts in an attempt to spare their FICO scores. The fact the cc companies are pulling this crap is enough reason alone to pay them off as fast as possible. A zero percent utilization on revolving credit lines will raise your FICO score anyways. There is no way to know if your card issuer is going to decrease your limit and/or increase your rate. They can do that whenever they want to without reason. The only way you can truly be safe is by paying it off - you’re literally dancing with th...(Read more of this comment)
Hi Nadia! My FICO score 6 mos ago was 696. It’s now 700 and I got a limit increase and a rate increase on one card. I called and I had the rate lowered back down. (10.99% to 16.99% to 11.242%) I think the bigger question is timeliness of payments. Paying on time is 35% of a credit score. It’s heavily weighted under the assumption that people who are chronically late paying their bills are probably juggling their cash flow because there just isn’t enough to go around. I’m not sure you can blanket say that ppl with one score or another are getting shafted. I suspect there is some behavioral analysis going on before companies do this, because if it was only score related, I’d probably have this problem too. Just my two cents.
I’ve been tempted to cancel my cards as they are paid off, but wanted to keep the available credit for the same reason. I’ve had Chase lower my limits and I’ve had US Bank raise my limit after paying off their card. Once I pay off all the cards, I won’t worry about the limits because zero balance divided by any credit limit will still be 0. That’s the debt to credit ratio I’m looking for!
The problem is that the CC companies are trying to repair the damage they have done to themselves over the last 6-10 years. They have extended so much credit that now it is catching up with them and some people can’t pay it back. Their trying to be proactive and revoke said credit to decrease their possible losses is unfortunately hurting people. What are the FICO scores of those getting the shaft? Are they across the board, or is this isolated to the under 720 crowd? My guess would be this is happening to people under 720, since the FICO score is an effort to rate the likelihood that the person will repay any loans. Anyone have different experience? (anyone with 760+ FICO score and spotless credit history?)
More and more stories about this keep happening, I think it is only a matter of time before all of them jump on the bandwagon and do it to some of their customers. If you were not paying that money towards paying down your balance then you would have that money to put down on your home. I care about my FICO score too and I want to be out of debt. I am willing to have my FICO score take a hit temporarily to have that peace of mind and not wondering what my credit card company might do. My thoughts may be different as I have both a mortgage and auto loan to continue to build my credit history.
I really don’t know about this, but it has me nervous too. Mr. MT and I would like to buy a house before November, and it has me second guessing every move. I’m even afraid to take advantage of a 0% offer we received because I don’t know how it will effect our FICO score (particularly now that Equifax won’t tell me anything)! Luckily we’ve only seen one card (Capital One) raise an interest rate, and it didn’t effect anything because we have a locked-in rate on a balance transfer, for the life of the balance. Unfortunately, if a credit line is reduced I don’t think a lender will care about what was, only what is. I’m just hoping our luck holds.
Chase and Bank of America have done this to me. After every thousand or two I pay off on BoA I get a letter in the mail letting me know my limit has been decreased. They also increased my rate from 7 to 22. I’ve called them and agreed not to charge anything else to the card. They’ve agreed to bring the rate back down to 7. Chase just started this with me. I recently received a letter stating that they too will be lowering limit and increasing rate. I’m going to call them and reason with them. I’m pretty sure since I’ve always paid on time that they will bring the rate back down but I will probably have to agree not to use the card anymore and that is just fine with me.
Unfortunately, if you borrow their money you have to play by their rules. I’m sure what they’re doing is permitted by the terms and conditions agreed to by the borrower. In reality, they have some ability to manipulate your credit score by lowering your limit or if their increased rates or any fees causes an increase in the balance, then it incrementally damages your credit score. The reality is the company is not offering a public service. In these economic times, they make more money by charging you more. Their self-interest is at odds with the borrower’s. If you don’t need to borrow money, then your credit score doesn’t matter. Credit cards are like a car dealer that can’t make any money selling you a car for cash. This is an adversarial business model and the only way you can win the game is not to play. So get out of debt fast and never borrow money again. The borrower IS slave to the lender. Debt-free since 2007!
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