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How to Blow Your Credit Limit -- Without Spending
Some card issuers are slashing credit lines to below the holder's balance.
User Comments
Posted 4:27 PM EST July 30, 2009
joedirt
2 Comments
If you have something like this show up on your credit report, deal with it right away. There is a box you can check that says "don't owe the money" on the dispute page. Check that box. Make sure you dispute every unfairly negative mark. Really. Don't let it slide because you think there's nothing you can do. This is more fully explained by Clark Howard on his website.
Posted 1:31 PM EST July 30, 2009
I would like to know what can be done now. It has happened on my HELOC(cutting the credit line/availability is frozen too), several of my bank credit cards (cut the credit line and HIGH interest rates of 29.99%!!!). I am 53,female and Hispanic; I earn a high end teaching salary along with my husband. We tried to apply through our credit union for a personal loan that they were advertising to put all these high interest cards on one loan and were denied because, of course, our cut credit lines mean we have negligent credit available--high debt ratios! Even though we make the money, our jobs are secure, we are tenured with years on the job. The credit companies will NOT reduce the rates even though they themselves say we have not paid late, etc. This has also happened to my mother, retired with an excellent pension, had a BA credit visa for 17K reduced to 10k within days. This is totally ridiculous as all of you know. But what can be done and who can we complain to???
Posted 11:33 AM EST July 30, 2009
Someone should do a demographic check on who is being effected by these practices by American Express. I personally have seen no such action on my credit card, however, my parents, over 65, their friends, over 65, and at least one acquaintance, over 55 DID experience it. How is AGE calculating into AMEX's assumptions with respect to risk? And where do they get off automatically charging an overbalance fee when THEY are the ones who unilaterally changed the terms of the contract? That strikes ME as bad faith. ALL credit card companies have an obligation to be transparent in their practices. Their methods of determination SHOULD be public knowledge.
Posted 11:17 AM EST July 30, 2009
As an AMEX & Blue card holder for 20 years and great credit history, we just learned that last month, they cut our credit limit from $26,000 to $6000 in one month! We have always paid on time with the exception of paying last month 6 days past the due date. We have always sent in eithor the full amount or at least half what is owed, paying it off the following month. The last payment was $24,000. On the 1st day past due we noticed that they raised our interest rate from 10.99 to 26% and cut our limit! We immediatly called them and they did lower the rate, but would not raise our credit line. We are so surprised at their business practice, especially with us after our relationship with them for 20 years! They also gave us the run-around (6 people that we spoke with.)The gov't should step in and fine/fix this immediate problem that most americans are facing. I haven't checked my FICO score yet..I hope it hasn't been hurt by this! Time will tell..In the meantime, we will not be us...(Read more of this comment)
Posted 11:32 PM EST June 28, 2009
Posted by: marymayhem
GE Money Bank has done this twice on my Walmart card. This only has a negative affect on my credit score, because it seems that I am always charged up to my limit on the card, because they lower the limit as soon as I pay it down another hundred dollars. I am boycotting Walmart now becuase of these unfair lending practices. They say they lowered the limit because of other accounts. I haven't been more than thrity days late on any account and made more than minimum payments for years now, so their reasons are beyond me.
Posted 2:44 PM EST April 08, 2009
This is my 2nd post; when I first read the article I was one of the "lucky ones" who'd not been hit by the phenomenon; well, in the past week, three credit card companies (AMEX, Bank of America, and Capital One) have informed me of reductions in my credit line; I'm expecting another from Chase any day now. I'm disappointed, but as I was forewarned, not surprised. There should be an review of practices of credit card companies, and mediated changes to how business is conducted. It was bad enough 15-20 years ago to have someone half your age tell you, "we can only give you a $500.00 limit". For someone with an excellent credit history, excellent income, and outstanding FICO rating?!?!?! This is crazy.
Posted 2:16 PM EST April 08, 2009
A stellar credit history with absolutely no late payments to any creditor and what does AMEX choose to do? Like the rest of you, they clamped our Costco AMEX credit line twice in as many months - now at ~$6k just following a $10k payment! To say I am angry about this would be an understatement. And then a supervisor at AMEX had the gall to lie to me and tell me that some of my accounts were delinquent was an outrage! I ended my conversation with then by canceling my account which, inevitably, will have consequences for Costco as well (as it already has). AMEX is going down and taking Costco with it!!! What is so ironic about this is that at least some of their customers, including myself, are now attending graduate school and, in 3 years, will have the 6-figure incomes they will be seeking to secure as customers. Not this kid. I do not intend to do ANY business with them in the future. There are obviously better credit companies out there to deal with.
Are there any l...(Read more of this comment)
Are there any l...(Read more of this comment)
Posted 12:19 PM EST March 26, 2009
My Citi accounts (2) were just "ratejacked" from 2.99% and 3.99% to 14.99%. I called and "negotiatied" with their "retention" department and got it lowered to 10.24% currently, which is still too high in my opinion. I've had the accounts 9 years and never had a late or missed payment.
I'm currently in the process of looking for the right consolidation loan to pay them off and take City off my "payroll" What's going to be funny is if other "valued customers" as they referred to me as, does the same thing and Citi, along with the other CC companies, end up screwing themselves in the long run and can't get anyone to do business with them and go under..... no wait, they'll all probably whine and complain and get more $$$ from our government.
I'm currently in the process of looking for the right consolidation loan to pay them off and take City off my "payroll" What's going to be funny is if other "valued customers" as they referred to me as, does the same thing and Citi, along with the other CC companies, end up screwing themselves in the long run and can't get anyone to do business with them and go under..... no wait, they'll all probably whine and complain and get more $$$ from our government.
Posted 6:08 PM EST March 16, 2009
To add to my earlier comment, American Express did say that my Experian credit report showed I had problems (company card, but they go off personal credit) and I needed to contact them, not American Express.
So I called Experian, paid for an updated credit report and found MY SCORE WAS ACTUALLY OVER 100 POINTS BETTER THAN WHEN I FIRST SIGNED ON WITH AMERICAN EXPRESS!
So that 'excuse' was bogus.
So I called Experian, paid for an updated credit report and found MY SCORE WAS ACTUALLY OVER 100 POINTS BETTER THAN WHEN I FIRST SIGNED ON WITH AMERICAN EXPRESS!
So that 'excuse' was bogus.
Posted 3:52 PM EST March 16, 2009
This just happened to my and I who share a store card. We had a 1500 credit limit to have it slashed to 800 which was what we hade owed, they left us with an available credit of $60, I had received a letter indicating that experian was reporting something negative on our credit reports and the decision was also based on the fact that we didn't have $10,000 worth of debt, they claim to have looked into our reports on Feb 8th, I spoke with them Feb 13th. I explained to them that I should have been able to see what they saw five days prior since reports take 30 days to reflect any changes, they informed me that I had to send them what I was looking at, or take it up with Experian, and if I wasn't satisfied I could just close the account. I tried explaining that we have always made our payments on time, always more than the minimum sometimes paying it all in one shot, and why would they want someone to have more than $10,000 worth of debt especially the way the economy is now. There ar...(Read more of this comment)
Posted 2:36 PM EST March 16, 2009
After being a card member for 5 years, American Express did the very same thing to me on the last day of November 2008.
I had $7,000 in debt and another $9,000 still available on my card when I tried to make a $600 purchase at IKEA and was declined. This is the ONLY way I knew there was a problem.
I then spent 2 hours (on hold) with American Express before being told by a VERY rude lady that my limit had been reduced by over 85% and there was nothing that could be done. I had paid on time, every time and spent years building my limit! It didn't matter.
I asked how they planned on notifying me, and supposedly they had posted a letter to me the day before. [American Express' rule is that when a letter is posted in the US Mail, it is considered having been received by the cardholder.] I didn't receive it until 10 days later.
Meanwhile, after their sales people 'harassed' me for years to use 'the card' for everything possible with my small business, I ...(Read more of this comment)
I had $7,000 in debt and another $9,000 still available on my card when I tried to make a $600 purchase at IKEA and was declined. This is the ONLY way I knew there was a problem.
I then spent 2 hours (on hold) with American Express before being told by a VERY rude lady that my limit had been reduced by over 85% and there was nothing that could be done. I had paid on time, every time and spent years building my limit! It didn't matter.
I asked how they planned on notifying me, and supposedly they had posted a letter to me the day before. [American Express' rule is that when a letter is posted in the US Mail, it is considered having been received by the cardholder.] I didn't receive it until 10 days later.
Meanwhile, after their sales people 'harassed' me for years to use 'the card' for everything possible with my small business, I ...(Read more of this comment)
Posted 12:01 PM EST March 16, 2009
Posted by: Lauren84
Wells Fargo did the same thing to me....I had an outstanding balance of $1250.00 with a credit limit of $6,800. They, without notice, slashed my credit limit to $1200, adding an 'over the limit fee' for the $50 over my new limit...Luckily, I didn't have a gigantic balance to pay off, but one thing that these CC companies don't care about is the fact that it now appears as though i have a maxed-out credit card. SO frustrating!
Posted 11:21 AM EST March 16, 2009
I urge everyone to contact Barney Frank and Chris Dodd in regard to making credit cards laws fair. Credit card issuers are , by using these practices,
hurting consumers and the economy as well. Many have recieved federal assistance.
Folks, stand up for yourselves and our country- contact your representatives as well as Frank and Dodd. The prior administration let all these credit "tricks and traps" get completely out of hand.
It will not change unless you act.
hurting consumers and the economy as well. Many have recieved federal assistance.
Folks, stand up for yourselves and our country- contact your representatives as well as Frank and Dodd. The prior administration let all these credit "tricks and traps" get completely out of hand.
It will not change unless you act.
Posted 11:18 AM EST March 16, 2009
When I saw this story onthe internet yesterdday, I wasn't surprised. Barclays Bank Delaware did it to me. I found out when I went online to look at my account. When I called them about it I was told that "the company was tightening its policies and reviewing all accounts" A few days later I got a letter int he mail, a letter that was a bunch of double talk. This letter stated "that my payments were too low and the amount was too high". When you have a balance of $1,000.00 or less and the amount due is $15.00, and you make a payment of $100.00 or more, how can your payments be too low against you balance? In fact I found the letter to be a total insult, offensive and totally unprofessional.
Taking in consideration the current economic situation we are in, and nearly every business struggling to survive, one under lying fact is that the customer is still the most valid asset to any business. It's apparent that Barclays Bank Delaware and many others banks have forgotten that b...(Read more of this comment)
Taking in consideration the current economic situation we are in, and nearly every business struggling to survive, one under lying fact is that the customer is still the most valid asset to any business. It's apparent that Barclays Bank Delaware and many others banks have forgotten that b...(Read more of this comment)
Posted 8:58 PM EST March 15, 2009
I don't mind credit limits being lowered to reduce risk but the credit card companies should be required to report the credit changes to the credit bureau and FICO as not reflecting the consumer's credit worthiness. Once these reductions affect our credit ratings, and they will, the banks can then charge higher interest rates on future loans. It can have a ripple effect on your other credit card accounts too. Other creditors can raise your interest rate or lower your credit line because one lender adjusted their risk in the market. They are essentially creating "bad" credit so they can charge higher interest in the future. Write to your congresional offices and also the House Financial Services Committee and Senate Banking Committe. Demand the consumer get protection. This patently unfair.
Posted 7:34 PM EST March 15, 2009
And, another practice is the infamous "time period" advance checks; with so many mailed to a customer's home, it's common practice for an "expired" check to be used for a balance transfer or other purpose; the check will be honored, but of course, at a different, higher (and often exhorbiant interest rate). And, don't call to say, "oh, sorry...it was a mistake"; that evil laugh on the other end is just your friendly bank customer service representative's, "yeah, that's what we wanted idiot" response.
Posted 6:05 PM EST March 15, 2009
Posted by: jeanenetain
My credit card company did something similiar to me. They sent me a notification that the interest rate on my credit card was being doubled, while I still had quite a large outstanding balance on my card. Their reason? I was "slow" in making payments on the card. I find that to be very interesting, considering that I sent this company a two hundred dollar payment on the card last month.
Posted 5:28 PM EST March 15, 2009
Eight years ago, when I was a single parent with a desperately sick child, I missed a couple of credit card payments to pay hospital bills instead. This was two in a row to three companies. The card companies lowered my credit limits below my balances and in the long run, I wound up paying $36,000 on an $11,000 debt and eventually declaring bankruptcy. After the companies who's credit cards were now in the over limit range reported it, the other ones, six in all, did the same thing. Consumer Credit Counseling service then offered to make deals with them to get my credit back on track. Discover didn't agree, but the counselling service implied that they had. Every month, the counselling service sent them money without a signed agreement. I think discover started sending the bills to them. I never got any. I thought I was in good shape, when really, Discover was sending them a bill each month that included a $100 late charge and a $39 over limit charge. Wachovia did the same thi...(Read more of this comment)
Posted 2:55 PM EST March 15, 2009
I have to believe the Government knew this was going to happen. Why else would they write a law and not make it effective for more than a year? The banks have proven to me they are running the country.
Posted 12:00 AM EST March 13, 2009
Posted by: drmedrano
Wow the government should stop wasting my tax money on these unscrupulous banks. We should just let the old bad banks die and just build a new one with new leaders and employees. I'm going to pay higher taxes at the same time pay over the credit fees if these banks do this to me.
posted 3:30 PM EST July 29, 2009
Posted by: Eric on LIVING OFF DIVIDENDS & PASSIVE INCOME
The banks are boiling the frog and this short-sighted ‘business practice’ will blow up in their face just like every other boneheaded decision the credit industry has made in the past ten years. This has nothing to do with risk management, it is a knee-jerk reaction to Congressional oversight of their Ponzi scheme that takes effect in Feb ‘10.
posted 3:55 AM EST March 18, 2009
Posted by: MoneyEnergy on LIVING OFF DIVIDENDS & PASSIVE INCOME
Hey, just linked to your great site again in a new post.
posted 3:07 AM EST March 17, 2009
Posted by: puppywuppy on reddit.com
Someone will sooner or later will f!*k up a headquarters to one of these pricks tim mcveigh showed no one is above being got.
posted 6:42 PM EST March 16, 2009
Posted by: FFBlog.ca on LIVING OFF DIVIDENDS & PASSIVE INCOME
Same thing happened to me … My AMEX credit limit was $10,100 for the longest time until my limit was slashed to $5,000 during January and showed up on my February statement. I don’t mind the limit decrease since I didn’t use it all anyways… I opened the AMEX card for the 6 month introductory limit of 3% to lower my cost of borrowing in 2008, but didn’t manage to pay it off in the 6 months as I had anticipated. I’m much smarter now with my credit and borrowing than I was in 2007. My biggest issue was the effect on my ratio: I went from 47.52% ($4800/10100) to 88% ($4400/5000) within a month. I’m now at 80% ($4000/5000) and hoping to get to 60% by the end of the month ($3000/5000).
posted 3:12 AM EST March 16, 2009
Posted by: Donnie on LIVING OFF DIVIDENDS & PASSIVE INCOME
I have an Amex card and a few years ago I had a credit limit of around $2000. I used a promotion (2.9% APR) to pay for tuition, and they slowly lowered the limit - every couple a months I’d get a letter telling me that my limit was a couple $100 lower (just above my balance). It sits today (paid off) at $700. I have two discover cards (pay them off each month) and the credit limits on those just keep going up and up. The 2nd account was opened last year (to take advantage of a promotion) and I started with a $5k limit, then they upped it to $7k, and now it’s at $10k. That might be a better alternative than Amex for you. You can usually find a promotion where they’ll give you $100 if you spend $500 in the first couple of months. I also have a couple cards through Bank of America and Chase, and they’ve never reduced my limits, either. Amex has been the only one. For the previous poster, before you try to get your credit limit reduced, take into account that i...(Read more of this comment)
posted 7:38 PM EST March 15, 2009
Posted by: Ben Moreno on LIVING OFF DIVIDENDS & PASSIVE INCOME
That’s what I call a gangster move. They didn’t like the fact that you were making money off of them instead of them making money off of you, haha. That does make sense though.
posted 5:41 PM EST March 14, 2009
Posted by: MoneyEnergy on LIVING OFF DIVIDENDS & PASSIVE INCOME
I don’t know, maybe it’s just AMEX? I’m a Canadian student living in the U.S. and I just recently quite easily got a Citibank Visa with a $3,000 limit (IMO, that’s a lot to give someone with no US credit history or income verification beyond my scholarship). I filled out a minimalist form and got the card just over a month later. That said, I’ve been trying to reduce some of my limits myself - scaling back the credit lines and lowering all my balances more than usual, just in case conditions get worse. I agree though that they’re very important for travelling.
posted 5:04 PM EST March 14, 2009
Posted by: Matt SF on LIVING OFF DIVIDENDS & PASSIVE INCOME
Same thing happened to me with my oldest credit card in December 2008. Lenders likely want to reduce their risk tolerance by pulling in some overextended credit. From their point of view, they’re likely worried about the scenario in your second question of distressed borrowers racking up more debt than they can repay.
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