Credit Cards lowering your credit limits!!

[Schatzy]

I just want to let everyone know that credit card companies are lowering peoples credit limits. If you ordered the UHR you might want to go check the limit.

 

 

Someone posted this on CoinTalk and I went and checked my CC and my credit limit was $8500 and now it is $2000. I have been using the CC for every purchase and when I get the statement I pay the CC in full every month. I have been doing this for a little over 3 years now. Its a Shell CC so I get free gas every month.

 

 

 

Just thought I would let you all know!!

 

 

[TJ'S Coins]

I've noticed the same thing too. I only carry them in case of emergency.

[jgrinz]

If they lower my 30k Platinum I will cancel the card as this is my EMERGENCY card - I get hounded by companys everyday so it will not be hard to find one to refill my needs if I have to.

 

I also heard of them (CC's) raising interest rates without warning along with reducing grace periods - so be careful out there ..

[James_OldeTowne]

Wow, that's quite a sign-o-the-times! I use my card seldom, mostly for gas, and of course to buy online. I much prefer to use cash.

[physics-fan3.14]

I have not had that problem, Jaime, rather quite the opposite. They just upgraded me to the Signature Platinum card and raised my limit to $20k. What on earth do I need that high a limit for?

[astrostu]

Yeah, Master Card just raised my limit, AmEx has kept mine the same for the last 4 years.

[Schatzy]

I have not had that problem, Jaime, rather quite the opposite. They just upgraded me to the Signature Platinum card and raised my limit to $20k. What on earth do I need that high a limit for?

 

WOW....time to go buy a new car.

 

 

My mom bought a brand new car with her CC and keep transfer the balance every year to a 0% interest card. Nothing like free money

[physics-fan3.14]

I have not had that problem, Jaime, rather quite the opposite. They just upgraded me to the Signature Platinum card and raised my limit to $20k. What on earth do I need that high a limit for?

 

WOW....time to go buy a new car.

 

 

My mom bought a brand new car with her CC and keep transfer the balance every year to a 0% interest card. Nothing like free money

 

Too bad I just bought an '08 Accord last year. And that was a bit more than my credit limit....

[Desert Gold]

The limit on one of my credit cards was lowered to 33% of its previous value and my other card's limit stayed the same. It seems like this practice of lowering credit limits could have an impact on the economy for large purchase items. I was upset when they lowered my limit, but I guess that it was nothing personal since it looks like others have had the same experience.

[Bugmann1974]

I don't have any credit cards, I figure if I can't pay cash for it then I don't need it.

[gmarguli]

I recently had one of my cards closed without any real warning. Just got a letter in the mail one day saying that they made the decision to close some accounts and my account was one of them. It was a meaningless card that I charged postage on, maybe $500 a month, and always paid off every month. Never late on it or any other cards/creditors.

 

No credit limit lowers on other cards. In fact, I had a couple raise my limits recently without my asking.

[physics-fan3.14]

I recently had one of my cards closed without any real warning. Just got a letter in the mail one day saying that they made the decision to close some accounts and my account was one of them. It was a meaningless card that I charged postage on, maybe $500 a month, and always paid off every month. Never late on it or any other cards/creditors.

 

No credit limit lowers on other cards. In fact, I had a couple raise my limits recently without my asking.

 

I don't think they are allowed to do this. You might want to look into it, because it has a direct affect on your credit score.

[RI AL]

We don't carry a balance...and rumor has it (rumor only) that American Express will offer us $300 to turn in our card. I don't think they are manking a heck of a lot of $ off of me.

[Schatzy]

I recently had one of my cards closed without any real warning. Just got a letter in the mail one day saying that they made the decision to close some accounts and my account was one of them. It was a meaningless card that I charged postage on, maybe $500 a month, and always paid off every month. Never late on it or any other cards/creditors.

 

No credit limit lowers on other cards. In fact, I had a couple raise my limits recently without my asking.

 

I don't think they are allowed to do this. You might want to look into it, because it has a direct affect on your credit score.

 

I bet they can.....have you ever read all of the fine print!!

 

 

Gmarguli....looks like you are not the only one!!

[RI AL]

I because it has a direct affect on your credit score.

 

This is the part that REALLY ticks me off...THEY cancel your card even though you are in good standing...and your credit report (FICO score) is negatively impacted. Doesn't make sense to me.

 

Ri AL

[just-john]

Now that the FED's looking like their going to be owning about 30%+ of some of the major banks .I think that we will be seeing many changes .My advise would be and is what I'm doing is keeping more cash at home . Never had much use for CC

since I retired have 1 Master Card and a debit card all I need.Had AMEX for 35 yrs

used on busness trips car rentals and hookers. But lost that when I retired best card love that company card will mis it .If all the CC stopped working today do you have enought cash on you right now to get home and go to work the next day ??

[Just Bob]

I don't have any credit cards, I figure if I can't pay cash for it then I don't need it.

 

 

(thumbs u

[Revenant]

I don't have any credit cards, I figure if I can't pay cash for it then I don't need it.

 

 

(thumbs u

 

Well, I'm close to that. I use my debit card, but I still have to have the money to back that up.

[RI AL]

I believe that John Q. American is now 39% owner of City Group. I wan't MY piece!

[World Colonial]

I because it has a direct affect on your credit score.

 

This is the part that REALLY ticks me off...THEY cancel your card even though you are in good standing...and your credit report (FICO score) is negatively impacted. Doesn't make sense to me.

 

Ri AL

 

I work for a large credit card issuer. Not in the credit or risk management function but I have a good idea how credit is managed at my company and it is presumably similar at every other large one.

 

Most of the credit decisions are made by an impersonal computer program. We have acquisition, underwriting, authorization, credit and collection models. The decision to reduce someone's line or cancel their card is driven by the credit models which decide whether your account is risky enough to have it looked at by a person or possibly in some cases, it can be a completely automated process where the expert system will just reduce your line and trigger the letter that some you received. (I believe a person looks at it where I work but it has been a long time since I looked at this.)

 

I do not specifically know why someone's account will be canceled or have their line reduced when they are in good standing, but the process is driven off of being able to predict how likely you or I are to default. (Its a score between Zero or no probablility and One or certainty.)

 

Now the first thing I would say is that given how absolutely reckless most card issuers have been in extending credit until recently and to a lesser extent even NOW (mine less than others but still not conservative), I think we can safely state that these models are hardly infallible (since they are based upon assumptions provided by econometricians). Because if they were, the models would have anticipated this fiasco and the write-offs would not be as large as they have been (and which will be even larger in the future).

 

Some lenders are simply reducing credit limits to take away unused credit lines. Part of this is because they perceive that if someone has not been using their credit until recently and they start using it now, this is probably due to financial distress and to a certain extent, that is or will be true. I also believe that another reason is because many lenders have insuffient capital to fund potential increases in line utilization or have better uses for it. They are getting pressure from regulators to tighten credit (even as the populist demagogues in Congress and the executive branch carp about "tight" credit) or maybe they cannot economically raise or renew capital in the capital markets. So they have to either cut back in this area or another one.

 

Another thing some of you might have read about was the recent chatter about lenders who were considering borrowers riskier based upon where they use their cards. This to me is much to do about nothing because this is exactly what I think card issuers SHOULD be doing as long as it is statistically correlated to default.

 

For example, I have long thought that anyone who uses a credit card to pay for basic living expenses and carries the balance to be a higher risk than someone who does not. (And today, someone can literally pay almost anything on a card, since they can write a check against their credit line.) Is this correct? I do not know but it is intuitively logical to me because any common sense person would consider running up their credit card balance to pay for necessities if they had to do so that they could pay their other bills such as their mortgage or car. Perhaps less so recently due to the implosion of the housing bubble now since they might be better off renting. But then, this all assumes that the typical card customer is actually logical and knowledgeable to take this approach to begin with.

 

As for the credit score, the card company (as all of you would presumably expect) is indifferent to that. They only care about whether they are going to be paid back. Now some issuers, such as one reported recently, are paying some customers to voluntarily cancel their cards. Now since I know this is not being done out of idealistic illusions of incurable romanticism, I can only guess that it is being selectively done. That is, for long time customers who are stretched financially now who might default. I think it is actually a smart strategy because it is a carrot to get paid FIRST (and that is even more important now), it reduces or eliminates the need to incur collection costs including agency fees and it also potentially maintains goodwill for the future.

[prudden]

Well, my limit is the same,as is my interest. But I ran into something using my BoA debit card today at Publix supermarket ATM. They are now charging a $2.00 fee for withdrawals when they never have before. I've been using Publix ATM just for that reason.Now I'll switch to my nearest BoA.

[Oldtrader3]

The banks act like this will lower their balance sheet loan exposure when they trap credit limits on Joe Blow. Actually, the real problem is with the $10 kazillion dollars in toxic assets that the banks own which don't show on their balance sheets because they are "unsure" (read chicken) to value for fear that these worthless assets would sink and destroy their balance sheets.

 

You and I and our lousy $10 K credit limits are pennies on the thousand dollar exposure through the bank's real toxic asset losses that they refuse to value and put on the balance sheet as a debit on the liabilities line. Call this creative lying or creative "cooking the books" by these same banks.true asset exposure by means of their foolish derivative trading account activity. These banks would never be able to balance they books if they fessed up to there toxic trading assets. The liability would bury them.

[World Colonial]

True, but the credit exposure on all risky credit needs to be addressed, no matter what the size.

[xJack]

I'd rather have low limits, makes me a better credit risk for real financing.

 

A few years ago, I tried to get my limit on one card changed from $20K to $30K to cover some auction purchases. This was before the credit crunch hit. They told me "no" because I hadn't paid a finance charge in over 5 years!

[RI AL]

Speaking of low credit limits, whenever I get a letter that my "credit limit has been increased" (I guess the card issuerers won't be sending out any more of those for a while), I IMMEDIATELY call the card company and refuse the increase. This is because, say, I wanted to buy a house, the lending institutions view the unused credit as a liability and negatively impact your chances of getting the home loan. We also belong to "LIFELOCK" which greatly limits the chances of use of my credit fraudulently by others.

 

Now, at age 58, we are blessed in that we own our home outright, pay off our card balances each month and when we bought our new Corolla a few months ago for 0% interest for 3 years, (I even pay THAT ahead of schedule which is dumb...but I HATE owing) my wife and I learned our FICO scores were in the 820's on average between the 3 main reporting companies. I can PROMISE the powers that be that if in any way my FICO score is negatively impacted because a card company closes my account or lowers my credit limit, I will make SO much noise and such a stink that they will regret the day they made that decision. From being in debt up to our whozits just out of college to being nearly debt free is something I am exceeding proud of and if anyone messes with my FICO score...they will face the wrath of RI AL. I write one mean letter, have NO hesitancy of speaking to my state reps (those that are sober), bank upity-ups and the POPE if necessary and doing whatever it takes to make things right. Screw the computer programs...this is my financial LIFE they are talking about. I WILL deal with a REAL person, preferably one that isn't in Pakistan or India (though they are very polite).

 

I know this sounds naive, smug and arrogant, and I understand the point of view of the card companies as so clearly explained by World Colonial, but I refuse to be penalized because of the stupidity of the card issuers...especially when I have a 100% flawless repayment record. Just let them try.....there will be blood...

 

American Express...take note. I don't want your $300 offer for me to close my account so don't send me one. I usually get about $600 back at the end of each year from gas, grocery and other purchases from American Express. They needn't bother to send me the offer...the shreader is right next to my desk. RI AL

[RI AL]

I don't have any credit cards, I figure if I can't pay cash for it then I don't need it.

 

 

But often there are (or were) advantages of using plastic...if you pay it off each month. The trick is using the plastic for ONLY what you need. That's discipline...and it isn't easy...and that's why the country is in the mess we are in today...at least partially. We use our American Express for EVERYTHING, gas, groceries, clothing, entertainment, utility bills and the like and as for me, I like my $600 rebate in December but as we may start traveling a bit more, we might switch to an airlines miles card instead. If I remember correctly, the "average family" has about $9000 in credit card balances. At 21% and now sometimes MUCH higher...THAT can hurt...a LOT!

 

And remember, a flawless repayment record on a credit card is an asset in your credit report/FICO score...unless of course they close your account for whatever reason. Then the can hit the fan.

 

As you can tell...this is one of my "pet topics".

[World Colonial]

If you want airline miles and you use or prefer to use an American Express card, get the Starwood card. It has an annual fee of $55 which you or some people may not be willing to pay, but most rewards cards have one. Its also better than any airline card that I know because Starwood let's you transfer your points to any major airline (All US and most or all of the internaitonal ones) Plus, Starwood will give you 5000 miles for every 20000 you transfer for this amount or more if transferred at one time. There is a point cap of 60000 per year but that is not an issue for most people, or at least for me.

 

On the FICO scores, I'm not familiar with the details of how they are calculated other than the fact that it is dependent upon payment history, how many trades someone has and how old they are, available credit and utilization.

 

Some of the things people pointed out here I believe are true but it just goes to show how flawed the whole process is. I've said it many times before and I will say it again. The biggest deficiency I see in modern credit practices is that it is mostly or entirely income statement based and appears to completely ignore the balance sheet.

 

Many of the supposed "prime" credit risks in today's economy who are at risk of default or at least under financial duress have little to no net worth or even liquidity. How can anyone who meets that definition possibly be considered "prime"?

 

The whole system is contingent on perpetual prosperity and where debt is never repaid but just continues to increase infinitely. That's part of what made the recent environment a mania. Eventually (possibly after one or more disastrous interventions by the government), lending standards will need to return to more normal practices where people who borrow have to remain within their financial capacity based upon their actual ability to pay. And when this does happen, the standard of living for a substantial minority of outright majority is going to fall in both the United States and in many other countries.

[astrostu]

I don't have any credit cards, I figure if I can't pay cash for it then I don't need it.

 

 

(thumbs u

 

This was brought up many moons ago on these boards, and I wanted to repeat it: In today's world, you need to have a credit history. In many cases, NO credit history is worse than BAD credit history. This is why my mom, a few years ago, got a separate card from my dad, so she could have a decade or three of her own credit history separate from him in the case of death.

[RI AL]

world colonial

 

I'm checking the Starword Card out this morning on the net. We seem to be going to Florida a bit more often these days and free fares would be nice. Too late for our March trip...but maybe next year.

 

Ri Al