According to Cnet, a survey found that 25% of U.S. credit card holders had their credit limits reduced within a 30-day period. The reason is, of course, that during the pandemic, many people lost their jobs, which affected their ability to repay credit card debt. It is easy to foresee that many Americans’ balances will keep rising, and the interest they pay will continue to increase as well. While banks certainly like collecting interest, if a cardholder goes bankrupt outright, the bank may not be able to recover much money. So lowering credit limits is a good way to reduce risk.
I noticed that my Target RedCard Visa credit limit was decreased from $15K to $5K.
According to DOC, quite a few Chase cardholders have also received emails in recent days saying their credit limits were reduced.
One of my freedom got slashed $500 from $5k
There have also been reports of AMEX cards having their limits quietly reduced.
I recently found Amex reduced my limit to 5K from 6K. No cut on three chase cards I’ve so far.
In addition, Barclays emailed cardholders saying that if they do not use the card within 30 days, the bank will close that card.
So do banks actually have the right to adjust your credit limit without your permission? I think they probably do. After all, your credit limit is originally set based on the bank’s assessment of your risk profile, so it can also be lowered or raised based on changes in your situation. I’d suggest not spending too aggressively on your cards lately, since it can easily trigger a Financial Review from AMEX or Chase, which can be quite a hassle.
