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Credit limit decrease - Are lenders starting to protect themselves?

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ngerasimatos
Valued Contributor

Credit limit decrease - Are lenders starting to protect themselves?

Current FICO score is 812, very low DTI ratio, very low util. The current home is paid in full and I have no significant outstanding loans. Yet  AMEX decided to lower my credit line on one of my cards by 50%. I have three cards with AMEX currently and pay them in full monthly. I haven't called them yet to understand why and the only reason I know it was dropped is I got a credit notification. AMEX has not even informed me yet, though I assume there is a "letter in the mail."

 

Is this the beginning of banks protecting themselves during the current financial situation?

 

I personally saw a similar trend with Chase back in 2008 which was easily resolved with a few phone calls and requesting them to perform a reconsideration. They not only reinstated my credit line but increased it, which was an unexpected and pleasant surprise. 

 

I just wonder if due to the recent events banks are starting to low limits to keep people from getting themselves into financial trouble? Is anyone else seeing a trend? 

Try not to become a man of success but rather to become a man of value
Albert Einstein 1879 - 1955

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9 REPLIES 9
blindambition
Senior Contributor

Re: Credit limit decrease - Are lenders starting to protect themselves?

Amex has been doing this on rarely utilized cardds. Call and most likely restored on the spot. Put some more usage to prevent reoccrance.

Happened to me last year. No reoccurrence after limit restored.

Message 2 of 10
AllZero
Mega Contributor

Re: Credit limit decrease - Are lenders starting to protect themselves?

Excellent advice from above. There has been post in this regards to support credit limit restoration.

Message 3 of 10
ngerasimatos
Valued Contributor

Re: Credit limit decrease - Are lenders starting to protect themselves?

This is my Starwood card which I recently converted to a Bonvoy Brilliant card, along with that silly annual fee. I probably run $5k through it monthly.

 

I guess deep down I am more annoyed that they did this AFTER charging me an annual upgrade fee. I'll give them a call tomorrow and see what can be done. If they won't reinstate the credit limit I will likely ask them to downgrade the card as I won't use it anymore and will instead put everything on my other AMEX cards. 

Try not to become a man of success but rather to become a man of value
Albert Einstein 1879 - 1955

800+ Club
Message 4 of 10
minski
Established Contributor

Re: Credit limit decrease - Are lenders starting to protect themselves?

Interesting. I will be keeping an eye on my 2 cards. I just checked and it looks as if my limits are untouched. I don't consider them particularly high, though - $15,000 and $6000. I use the first card monthly and currently have a balance over $1000. I don't think I would really mind a decrease since I have other cards.
Message 5 of 10
Anonymous
Not applicable

Re: Credit limit decrease - Are lenders starting to protect themselves?

Probably will see some lenders that are way too generous with limits tightening up like AMEX, Disco, and Synchrony. I'll be annoyed but not surprised if I get some limits slashed. 

Message 6 of 10
Anonymous
Not applicable

Re: Credit limit decrease - Are lenders starting to protect themselves?


@blindambition wrote:

Amex has been doing this on rarely utilized cardds. Call and most likely restored on the spot. Put some more usage to prevent reoccrance.

Happened to me last year. No reoccurrence after limit restored.


+1 Great Advice!

Message 7 of 10
Anonymous
Not applicable

Re: Credit limit decrease - Are lenders starting to protect themselves?

What was the limit before the reduction?

 

All the reports of significant AmEx reductions had truly minimal spend and/or many months without any spend that I can recall. Certainly no where close to putting 60k/year through the card and have it reduced. 

 

Message 8 of 10
Anonymous
Not applicable

Re: Credit limit decrease - Are lenders starting to protect themselves?

My amex was already cut from low usage but it appears amex may be cutting some. My brother and wife had there's cut. He was low usage so understandable but she used it more 

Message 9 of 10
Anonymous
Not applicable

Re: Credit limit decrease - Are lenders starting to protect themselves?

This has happened to some who barely utilize their existing limit.  This is the first thread I've seen where someone putting $5k/month through the card had their limit cut, but if the limit was really high relative to usage (say, 30K plus) I could see how it could happen.  30k to 15k is a big cut but existing usage still fits (though utilization will be higher).

 

What was the limit before it was cut?  Also, did you let these 5K+ balances report, or did you always pay before statement cut?

 

So far, if you call they seem to be good about restoring the limit.  They're probably trying to curb "wasted limits" by cutting (usually by 50%) accounts that never see more than a certain utilization %.

 

I know we preach low utilization to help with scores but sometimes it leads to "use it or lose it" with issuers.

 

 

Message 10 of 10
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