What to Do if a Credit Card Issuer Lowers Your Credit Limit

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- When it comes to granting credit, you don’t hold the power in the relationship. The bank does.
- Try not to take the credit cut personally. This is business, not a reflection of your worth as a person.
- There are plenty of other credit card issuers.

How to appeal a credit cut
- Create a plan. Before you ask the issuer to reinstate your credit limit, brainstorm a few reasons why it should. If you were the bank, what would persuade you? For example, maybe you’ve been a customer for five years and never missed a payment.
- Call. Generally, you might get more favorable results if you speak to a human. That means appealing the old-fashioned way: Call the number on the back of the card and speak to a customer service representative.
- Make your case — nicely. Take advantage of any leeway the card issuer’s human representative might have. Remain calm and cordial as you lay out reasons that your credit limit should be restored. Again, this is a business discussion.
Why your credit scores might drop
How to safeguard your credit
- Open a different credit card account. This is an easy way to boost your credit availability. Your credit scores might take a temporary hit of a few points for opening a new account, but in the longer run, more credit will help your scores.
- Ask for increases from other credit accounts. You might be able to offset the credit cut from one card account by asking for and receiving raises in your limit on other existing credit accounts.
- Pay down the balance. Reduce spending on the card with the lowered limit and pay off the balance, or at least some of it. Besides eliminating debt, paying down a card balance gives you more headroom against your new, lower limit.
- Don’t get mad and close the account. Closing the account not only means you’ll lose the entire credit line, but you’ll lose your credit history, which can damage your credit scores — especially if it’s an account you’ve had for many years.
When it might not matter
Why an issuer might reduce your credit limit
- You didn’t use the card enough. Rarely or never using the card could be a reason the issuer reduces your credit limit or closes the account altogether.
- You made mistakes with credit. If you’re paying late on a credit account, you might be viewed as a higher risk of default (not paying). Even if you’ve been a perfect customer with the issuer in question, that issuer might still lower your credit limit based on your payment behavior with other credit lenders.
- The issuer is reducing credit risk. Sometimes a credit cut has nothing to do with you. The issuer might make a business decision to reduce its risk by lowering the amount of credit it makes available to customers generally.
- Identity theft. If someone steals your identity and begins opening new credit accounts and abusing them, that sudden change in behavior could trigger a reduction in credit limit.
How to minimize the chance of a cut
- Use the card. You’re more likely to see a credit reduction if you don’t use the credit card. (The issuer could also close the account entirely, which is the ultimate credit reduction.) That’s why it’s a good idea to use the card at least occasionally. You could, for example, set it as the autopay method for a recurring monthly bill.
- But don’t overuse it. Maxing out a card raises your credit utilization, which might also trigger an issuer to reduce your limit.
- Periodically ask for a raise. Over the years, if you receive a higher and higher limit, a reduction won’t hurt as much.
- Be a good customer. All the usual things apply: Pay your credit card bill on time, every time — in full is best.
- Pay attention to macroeconomics. That’s less nerdy than it sounds. Basically, take note of signs of a U.S. economic recession — when news headlines mention rampant layoffs, lower consumer confidence, higher personal debt and slower home sales, for example. They could be signs that a credit card issuer will put the brakes on credit in general, and maybe yours specifically. Recessions are a good time to be on your best behavior with your credit accounts, if you’re able.
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