Credit Cards that are closing accounts or decreasing limits for no reason

[Anonymous]

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@sarge12 wrote:

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My previous fear of very high credit limits was irrational and self defeating, because I trust myself to not let high limits modify my behavior now. That is the only danger for high limits is if I do not trust myself to resist any urges to increase spending based on higher credit limits.

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There are other reasons.    A handful of issuers are sensitive to overall credit limits, and will not issue you a card if they feel you already have enough credit.   Many more are sensitive to their total exposure with you, and while some will adjust CL on existing cards to give you a new one (some of the majors without asking!) others will just decline.

And for those with things to hide, lower total CLs may increase the chance of automatic approval for new cards, avoiding eyes on the account.

[sarge12]

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@Anonymous wrote:

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@sarge12 wrote:

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My previous fear of very high credit limits was irrational and self defeating, because I trust myself to not let high limits modify my behavior now. That is the only danger for high limits is if I do not trust myself to resist any urges to increase spending based on higher credit limits.

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There are other reasons.    A handful of issuers are sensitive to overall credit limits, and will not issue you a card if they feel you already have enough credit.   Many more are sensitive to their total exposure with you, and while some will adjust CL on existing cards to give you a new one (some of the majors without asking!) others will just decline.

And for those with things to hide, lower total CLs may increase the chance of automatic approval for new cards, avoiding eyes on the account.

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The things I have to hide are not on credit reports...at least I hope not.

[Anonymous]

In todays age, nothing is as hidden as you might think. lol

[kdm31091]

It's not super common but there are situations where banks get concerned about your overall limits vs your income. It's something to be aware of, even if it doesn't always come up. I wouldn't say there is a need to be afraid of high limits, but there should be a balance between having a comfortable limit for your average spend on the card vs chasing unnecessary CLIs that just serve to increase exposure and possibly draw attention to your account for no purpose since you won't utilize it anyway.

[jamesdwi]

Clean report, no lates, no derogs, or anything negative, overall  UTL around 2% as reporting. AAoA 5years 4 months, oldest card 11 years.  In the last 3 months,  got 2 new PenFed's credit cards, one HP.  DW was diagnosed with possible Covid-19, took advantage of a covid-19 loan through my credit union, another HP, but approved for 10k at 2% apr. Paid off 2 personal loans, and paid down my credit card with the highest APR, went from 2 personal loans with a monthly payment of $1500 total, to 1 payment of $300.    So lots of action on my reports. Total CL accross all cards, over 400k.  

Even with all that no CLD, or wierd account closing, I did have 1 or 2 cards in the last couple of months closed, but I can just assume they were for non-use. Old cards not used at all in the last 2-3+ years at least, small credit limits, under $7,000 for both cards.  Not my oldest, still had other accounts with the lenders with much higher limits untouched.   Checked all my High Limit cards,  AMEX, Chase, CapitalOne, Discover, FNBO, Citi, Sams Club, Lowes.  no CLD's. I do avoid lenders with a track record of un-warranted CLD like BofA, and I haven't had a CLD in years, and that one was a little warranted,  got on AMEX's bad size by not making large enough payments on my revolver, and the balance was growing for 3-4 months. So got CLD'd but I was new with AMEX at the time, but time healed all wounds the card is now my highest CL at $32,500 so not complaining. 

My company deemed me critical, so I will continue to work from home, as I have for the last 5 years. The 30 second commute down the stairs to my dining room can be rough some mornings ;-p

DW is fine, she has an upper respitory infection, has taken 2 covid-19 tests both came back negative, so all good on that front as well. 

[sarge12]

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@kdm31091 wrote:

It's not super common but there are situations where banks get concerned about your overall limits vs your income. It's something to be aware of, even if it doesn't always come up. I wouldn't say there is a need to be afraid of high limits, but there should be a balance between having a comfortable limit for your average spend on the card vs chasing unnecessary CLIs that just serve to increase exposure and possibly draw attention to your account for no purpose since you won't utilize it anyway.

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I really do not see why anybody is surprised, I am almost 62, and I have never seen such a high percentage of the Worlds economy just shut down completely. Legislators are now mandating that those who miss payments not have their credit reports or scores reflect the delinquincies during the pandemic. That is also unprecedented. Card issuer are rightfully concerned about all their cardholders not pay as normal, while also increasing their use of credit. If these 2 things collide in a perfect storm of delayed payments and increased credit use, it can much like a run on banks result in the bank itself running out of liquid assets. It may in fact be very good for the banks after the pandemic is over, but they have to survive until then. The Government legislation is basically removing the tools banks have to force payment of the debt, so CLD's and closures are all they have to stop the bleeding. Lenders in general are bleeding capital right now. This is not anywhere near over by any stretch, and I anticipate a Government bailout will be required to prevent bank closures. The Government also has legislated away the banks foreclosing on homes also if debtors can't pay for a year. I hate CLD's and closures as well, but I understand why it is happening, and do not really blame the credit card issuers. It is reactive in nature. Expect more of it, and a lot more of it if we do not crank this economic engine back up. The Government can't just keep printing money to fix it either.

[91173]

I just found this site after getting a letter from AMEX last month saying they were cutting the limit in half on a card for lack of use. Nobody else has done anything to me, but I am putting some charges (albeit small) on all of my cards now each month so nobody closes one. I have two cards over 25 years old and my average age is over 12 years old, so I really don't want anything shut down for lack of use.

But I was looking through Mint the other day and my spending over the past couple of months is the lowest in the last year, since I'm not out doing stuff and have essentially cut my spending to groceries and necessary household items. Everyone I know is the same. Given that, I would expect any card issuer to get very nervous if they saw a customer's usage actually going up in the past two months. It's a huge red flag.

[Remedios]

Why would it be a concern if its paid in full? 

[Anonymous]

I think the canary in the coal mine for all of this is going to be Capital One.   They are mostly a consumer level lender with significant sub-prime exposure.  The "too big to fail" banks, which I consider at this point to be JP Morgan Chase, BOA, Citigroup, Wells Fargo, Goldman Sachs and Morgan Stanley, don't have nearly as much to worry about.  The government will make them whole, regardless of the cost.  But Capital One, at number 11 on the list of banks by assets,  may be allowed to fail-and then the big guys would swoop in and pick over the carcus.  Predatory capitalism at it's finest.

So when I see lots of posts about Capital One closing cards and cutting credit lines, I'll know the game is on.

[Anonymous]

USAA lowered P2's limit from 25k to $500.  LOL.  We cancelled insurance with them 4 months ago and hadn't used the card in 3 years.   I am guessing that is the reason.  Geico was half the price.  

She is down to $180k in limits with a score over 800.  I have over $300k in limits with a score in the low 700's. 

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@Anonymous wrote:

I think the canary in the coal mine for all of this is going to be Capital One.   They are mostly a consumer level lender with significant sub-prime exposure.  The "too big to fail" banks, which I consider at this point to be JP Morgan Chase, BOA, Citigroup, Wells Fargo, Goldman Sachs and Morgan Stanley, don't have nearly as much to worry about.  The government will make them whole, regardless of the cost.  But Capital One, at number 11 on the list of banks by assets,  may be allowed to fail-and then the big guys would swoop in and pick over the carcus.  Predatory capitalism at it's finest.

So when I see lots of posts about Capital One closing cards and cutting credit lines, I'll know the game is on.

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