When a lender raises your credit card limit, that may lower your credit utilization rate and, in some cases, could increase your score. Lenders can also reduce your credit limit if theyâve given out too much credit and need to tighten up their lending. At a momentâs notice, your credit card issuer can lower your credit limit. Itâs not a guarantee that the phone rep will change your limit, but making a convincing (and respectful) case doesnât hurt. When you apply for a credit card, the credit card issuer looks at your credit and the ability to pay back any outstanding balance. Credit card companies can slash your credit limit for a variety of reasons. A sudden decrease in credit can also have another negative impact on your financial life: increased credit utilization, which is the second most important factor in determining your credit score.. A leading-edge research firm focused on digital transformation. Sign up for Personal Finance. They may also cut limits to lower their risk with specific customers. I have had a wal-mart credit card for approximately three years. To keep cards active, I use a combination of strategies. Why your credit limit might be lowered due to coronavirus 09 September 2020 - 05:34PM PR Newswire (US) SAN JOSE, Calif., Sept. 9, 2020 /PRNewswire/ -- As economic conditions continue to be challenging because of the coronavirus pandemic, millions of Americans continue to struggle with maintaining their financial health. Other cards offer a credit-limit range. Meanwhile, your total balances stay at $2,000. Credit card use was down at an annual rate of 30% during March due to the pandemic. If you rely on your credit cards to pay important monthly bills, a sudden decrease in available credit could mean the next bill you pay might push you past your credit limit. Just because the credit card company sets a limit at a specific point in time doesn't mean your finances will always be the same. This could also mean your revolving percentage could go up, and it could go up a lot. Experts suggest using no more than 30% of your available credit limit. Good credit management is a sign to your issuer that you arenât a big risk and that could help you avoid a limit decrease if the issuer decides to lower limits across the board. Learn the ins and outs of any unexpected changes in your credit limit, and how to deal with it if your credit card company lowers your credit card limit without warning. Set up alerts that let you know when youâre approaching a certain balance on your credit cards. The credit score formula looks at the percentage of your available credit in use. Barclaycard reducing credit limit then closing account due to inactivity. With so much to juggle, I'm not surprised my limit was cut by American Express. Work with your lender early and often. Other factors that determine your credit limit include your income, your debt-to-income ratio, your credit history, and other credit cards you have, as well as their limits. But if your credit limits are dropped to $20,000, all of a sudden you're using 25% of your available credit. Inactivity is ⦠We do not give investment advice or encourage you to adopt a certain investment strategy. Keep tabs on your credit and utilize free credit report sites to know your credit history. There are three strategies you can take to avoid the same fate as me: The first strategy to keep up your credit limits is to keep your credit score high. Lastly, if you barely use a card, an issuer may be more likely to cut the limit so that youâre not tempted to run up the whole line during a difficult time. Yesterday, I received a notice from [my credit card company] that my credit limit had been lowered from $10,000 to $4,000 on my primary credit card. I have four credit cards from American Express but only use one of them regularly, my American Express® Gold Card, which has no preset spending limit. Credit Card Issuers Start to Lower Cardholder Limits. Your credit card company may periodically increase your credit limit if you prove to be a responsible credit card user and always make your monthly payments on time. Never been late, have not missed a payment of any kind for the past 10-12 years and I get the letter stating the same thing. Even with a reduced limit, the card is still contributing to your credit score. ... informing me that they were reducing my credit limit from £11,500 to £300. When the organization conducted a recent online poll, 11 percent of participants reported theyâd had credit limits lowered in the past six months. Facing that the phone rep to tell you why your credit card limit lowered... In Personal Finance Insider ( for a variety of reasons also help you avoid credit! 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