03-27-2009 06:15 PM
03-27-2009 06:43 PM
Sorry OP. How much of the original limit do you think you used on average every month? Keep the thing open it's business nothing personal although I understand your frustration. 22 years old I would keep it open for the duration.
03-28-2009 03:58 AM
But, people should try not to take anything personal when it comes to banks and credit. It's not personal, its business. Whatever their reason, it was not personal for them.....in fact don't we sometimes wish they were a little less "impersonal?"
However it is frustrating. On the other hand, a nearly $60k CL that has never had use above $12k is not a good business decision. When they extend a CL, this puts certain resources in play that they cannot use elsewhere.
The banks are under a lot of push by Uncle Sam to "GET LENDING AGAIN." With that said, in order for them to lend in the levels that Uncy Sam wants, they will have to make "MORE EFFIECIENT USE" of the resources they have.
Before there was SO MUCH easy money that it wasn't a problem or factor. And that is why ANYBODY could get a mortgage with practically nothing down and submarine credit.
Now we collectively are paying a price. There is less to go around. That which is available will go to two places: Where it gets used and Where it makes a profit. Credit that you never used is not used, and Credit not used doesn't make a profit. From my perspective, I wonder how we could expect this not to happen?
03-28-2009 04:47 AM
03-28-2009 05:32 AM
I understand and I agree with you all. The explanations and shared experiences have been great on this post. You have made me feel alot better about the CLD (if one can feel OK about that). I do have more credit than I could possibly need, and I do PIF almost always, but I am careful to use each of my 6 CC's at least every other month for fear of inactivity. I would have rather that BOA jack up the interest rate (its at 9.9%) if they needed to make a change. Because I PIF, that doesn't hurt me (or help them, I guess). Both my CC's with Chase and CapOne have done that, but left the CL alone.
My biggest beef with BOA was the lack of notice. I was fine because I had a very low balance relative to the CL. But what if someone has been laid off from their job, struggling in this lousy economy, up against their limits, and wham, they get hit by this. Could cause an inadvertant default.
I am going to take Haulingupthescore's advice and PIF, but still make sure I keep all CC's active. I am fotunate that I can PIF before it posts, most months. You guys have been a great help.
03-28-2009 05:34 AM
I asked this question on another credit board and never did get an answer. Does it cost a bank any money to keep open a credit limit on your credit card?
I believe that it does. (I've worked for banks but never in retail lending - only on the institutional side.) Banks must maintain reserves against possible losses that are calculated as a percent of total open credit. When times are tough, as they are now, banks must add to these reserves & in doing so, take a charge against earnings. These reserves cover any accounts that go bad. So, yes - extending credit costs money.
I can sympathize with the OP because Barclay's Bank did the same thing to me a couple of months ago: reduced my CL from $30K to $14.4K. Their explanation: I wasn't using it. They were right - I rarely charged more than a couple of hundred dollars per month & always paid in full. I was annoyed but I haven't stopped using the card.
03-28-2009 06:38 AM
Yes, a bank must maintain reserves against its loan portfolio. I am sure that revolving credit has a different formula than installment or mortgages loans, but a bank is rated and regulated by the FDIC based upon its balance sheets, reserves, etc.
When you have a $10k CL it is either a loan (you have it as a balance) or potential loan (you may use it) which the bank must be able to meet. If they do not have a resource to fund your use of the cc, it would be like you or I writing a check without money to cover it.
03-28-2009 06:44 AM
Just remember, revolving credit (cc's) are really "pre-approved" loans. And a bank may change determine at any time to change its approval decision. Any money you have in balance, they must honor the repayment terms. But they are not obligated to continue to extend you credit. And they may change their loan decisions based upon any number of factors, many of which we have discussed here.
In fact, it may become more common for the time being for banks to only issued "necessary" or "actually needed (meaning used) credit. We may see a trend that banks begin to give less "fluff" meaning less unused CL's over time, depending on how this whole financial sector and the economy go.
Revolving credit really is a luxury, especially large CL's when you don't have a Rockefeller income. It is not for a designated purpose. And unwise use of credit is (both by the lenders and borrowers) is the why we face the problems we do now.
04-04-2009 12:13 PM
Eh, BofA finally got me, too.
Rate went from 9.9 to 15.65 (I think).
I've been paying this card down, but I guess it didn't happen fast enough. I've only used it once in the past few months -- when they were offering the double world points for spending >$50 at Wally World.
Ahhh, time to get motivated, I suppose.
04-04-2009 12:30 PM
Sorry to hear that, Peas.
The major problem I have with my BoA Visa is that it's a mediocre card: The APR (7.9% Fixed) is good, but not great. My credit line was just reduced to $23,500, and my 2 Chase Freedom cards' rewards program is far superior to WorldPoints.
My BoA Visa is going to remain in the sockdrawer!