What Can I Do If My Credit Card Company Lowers My Line of Credit?

Canceling a card in anger over a lowered credit line could hamper your credit score.

A credit card company's decision to lower a customer's credit limit is affected by several factors, and some are beyond consumers' control. For instance, an economic downturn usually results in more delinquent accounts, and companies begin lowering credit lines to protect their bottom lines. In such cases, even cardholders with good credit histories may have their credit lines reduced.

Solution

Try to get your credit card company to reverse the decision to lower your credit line by calling the company's customer service department. If you've been a good customer, calmly point that out to the representative who answers your call. People who have been longtime customers and have paid their bills on time without exceeding their credit limits have a better chance of tipping the situation in their favor. Ask to speak to a manager if the representative won't agree to restore your higher credit limit, and calmly repeat your story to the manager.

Warning

Canceling a card in anger over a lowered credit line could hamper your credit score. It would be better to pay off the card and leave the account open. A portion of your credit score is affected by how much of your available credit you use. Closing an account could leave you with more debt than available credit, making it appear as though you're maxing out your credit lines. Bankrate and other financial websites recommend consumers use less than 30 percent of their available credit to avoid lowering their credit scores.

Potential

Consider transferring your credit card balance if you can't persuade a company to restore your higher credit line. You may be able to transfer the balance to another company that will give you a higher credit limit. Balance transfer deals sometimes include low interest rates that expire after a specified amount of time. Therefore, you could save money on interest payments if you pay off the transferred balance before the introductory offer expires.

Prevention

Pay down or pay off credit card debt. A company that lowers your credit line may view you as a greater credit risk, especially if you have high balances. Maintaining high balances, exceeding your credit limit or making late payments could cause other companies to lower your credit lines as well.

Considerations

Pay attention to the types of purchases you make with your credit cards to avoid having your credit lines lowered. Credit-scoring models vary among companies, and some examine what consumers buy with their credit cards. For example, a Bankrate article titled "Coping with Lower Credit Card Limits" notes that some companies may assume a consumer is in financial trouble if he suddenly begins using credit cards to buy basic necessities such as groceries.

References

• Bankrate: Coping with Lower Credit Card Limits
• Smart Money: Banks Lowering Consumers' Credit-Card Limits
• CNN Money: Consumer Credit Limit Crackdown