<p>I have a Chase Freedom VISA card which does have a balance on it right now. I always stay well below the credit card limit, however, so as to maximize my credit score. I just logged into the account to check my balance, and was shocked to see my credit line had been reduced by $6000 - putting me within a few hundred dollars of the credit limit! I received no notification from Chase of this change - nothing by mail or email. My last statement, from just a few days ago, still had the higher limit. I am furious that Chase did this with no notification or warning - a large purchase would have easily put me over the new limit - incuring all kinds of fees and penalties.</p>
<p>Now I will stop using this credit card until it is paid off in full. Just wanted to pass this experience along - keep an eye on your credit card limits!</p>
<p>Something similar happened to us with our cell phone bill. All of a sudden, we had gone over our minutes. Turns out they had changed our plan without telling us. I can’t believe companies can do that.</p>
<p>I called - and the sweet young customer service rep was very apologetic - but totally useless. Apparently the limit was reduced yesterday and a letter went in the mail yesterday as well. Despite the fact that I receive my statements online, the letter is not accessible online and she could not tell me what it said! I’m just glad I caught it quickly. Cutting up that card!</p>
<p>I have a Chase MasterCard and when I logged into my online account, there was a different number on my account (no limit change, though). I called and was informed that I would be getting a new card, with a new number, branded VISA instead of MasterCard because “Chase has a new relationship” with VISA. </p>
<p>And, by the way, I’ll be getting a list from Chase of what “appears” (to them) to be automatic payments, and I have to change all of those to my new account number. I asked the support person if Chase would be compensating me for my time to do that out of the proceeds of their “new relationship.” I could almost hear her blank stare.</p>
<p>I think I’ll be changing them to my Capitol One account, thank you very much.</p>
<p>I think I have a Chase visa as well. For years they have been increasing my credit line. I ASKED them to lower it, and they said NO. I hope mine has been reduced. I do NOT need a $25,000 credit limit on my credit card.</p>
<p>In looking into this (I’ve been doing so recently), it looks like it’s only a problem if your utilization is very low, less than 5%. So unless your CL is 20x your monthly spending, it shouldn’t be a problem. And even in that situation, having a low utilization seems to be relatively low impact, having a 10% utilization is just slightly better than having a 2% utilization, where as it’s much better than having 30% utilization. </p>
<p>Don’t just cut up the card- close the account. Otherwise you will forget about it until some charges show up or they change the rules and start charging you a fee…</p>
<p>I’m a manager in risk management and compliance for a large complex banking organization - not Chase! While I have no idea exactly why Chase cut your credit limit, there are several usual scenarios that account for many such actions. Several of the scenarios reflect the customer’s behavior or financial situation, the other is entirely related to the banks situation.</p>
<p>Bank regulators expect banks to conduct ongoing monitoring of their credit card portfolios to manage risk, since most of the funds are provided by customer deposits - the majority of which are insured by the U.S. government. In the microfine print of your credit card agreement, banks disclose that credit lines can be adjusted at their discretion if there is a change in financial circumstances for the cardholder. The same agreement states that the bank can periodically check your credit report. Some causes for reductions or freezes can include:</p>
<ol>
<li> Being frequently past due on the account in question</li>
<li> Being past due on other obligations to the issuer (car loan or mortgage)</li>
<li> Being past due on obligations to other creditors</li>
<li> Items going to collection (medical bills etc.))</li>
<li> Liens, bankruptcy etc.</li>
<li> Reduction in income or loss of job (have your deposits changed from payroll to unemployment benefits)</li>
<li> Significant additional financial obligations undertaken since the credit line was set (many new credit cards,loans or lines of credit)</li>
</ol>
<p>Another reason for reducing credit lines can be entirely based upon the needs of the bank. Under the Basal capital accords, banks must now hold more capital for loans and unused credit lines than in the past. It would be perfectly logical for a bank to go through its portfolio and trim credit lines of good customers who have historically never used a good portion of their line. In aggregate this could result is a lesser capital charge and less potential loan losses for the bank.</p>
<p>If my credit line was cut, I would be plenty mad too. However, thinking this through logically, the bank is only going to cut the credit line because either it thinks you are not as good a credit risk as they once thought, or the bank needs to cut its credit exposure to a portfolio of customers for its own risk management needs. In either case it would be defeating the purpose of the credit line reduction to give you advanced notice - since the cardholder could run their tab to the max before the date of the reduction. Since cutting a credit line implicates various consumer protection regulations, I would assume the bank as a policy will not discuss the decision through regular customer service personnel, but let the letter approved by compliance and the lawyers provide the reasons. I would assume the letter will have a contact number for a specific department or person if you have further questions.</p>
<p>@Thumper1 While I don’t have a chase visa, we have had our credit limit raised a number of times by Citibank. We always call and have it reduced back down to a reasonable level. I can’t imagine why chase wouldn’t lower your limit. I’d call again that seems weird. </p>
<p>It’s too late to edit my previous post, but I should also mention a couple other things that will quickly get your credit line reduced or cancelled. Though these do not appear directly applicable to the OP:</p>
<ol>
<li><p>“Churning” new credit card offers in order to try and collect huge bonuses of “points” or “miles” from the issuer. Card issuers always want you to open new accounts, unless you trying to collect multiple signup bonuses. When churning accounts is detected, the bank may decline to give you the bonus, or may simply close some or all of the accounts.</p></li>
<li><p>“Manufactured Spending”. Some account holders get greedy and want to “super size” the number of miles or points they earn - especially if they need a lot of miles or points to earn an award in a short time. They attempt this by buying large dollar amounts of prepaid cards at a certain nationwide pharmacy chain. This type of activity is possible because the prepaid cards are deemed “purchases”, where interest only accrues if you fail to pay off the balance each month, instead of a “cash advance” where interest accrues from the date of transaction. The cards are then spent like cash or the really greedy attempt to get refunds or exchange them for cash to have the money to pay off the purchase when the bill comes.</p></li>
</ol>
<p>The transaction filtering programs that the government has insisted that all decent sized banks have to help detect money laundering and terrorist financing post 9/11 is very good at detecting these types of behaviors. Needless to say these behaviors are expensive to the banks because of the points or miles given, could be interpreted as a form of money laundering and carry increased credit risk - so once detected, these accounts are normally closed. Some banks will also put you on a “do not do business with” list - so proceed at your own risk. </p>
<p>ChicagoBear, I can understand from your excellent explanation why a bank might want to reduce the credit limit of a good customer who never uses it, but to me doing so without warning when it might easily result in going over the limit, with associated fees, inconvenience, and embarrassment is unconscionable. </p>
<p>I wonder if they would waive fees and issue a letter of explanation to creditors if the customer unknowingly went over between having their credit cut and being notified? Would they reimburse the customer for reinstatement fees and so forth incurred? Or would they do the rational thing and honor the charges?</p>