Due to the mortgage losses, banks are reducing the credit card borrowing limits, even for those who have good credit records. I have some friends recently received letters from their credit card issuers stating that their credit limits have been reduced. Rich Helmich, my colleague, told me that he had a Citi Dividend Platinum Select Card got closed by Citi Bank last week. Factors that could let credit card issuers make this decision: minor mess-up (late payment once? exceed the credit limit once?), carrying too much balance on your credit cards (usually credit issuers “soft” pull your credit report periodically) or other risky debts, not profitable to the credit card issuers……
Lowering your credit limit can push up your debt-to-credit ratio, which will hurt your credit score. How can you defend your credit limit if this happen to you?
Make An Appeal: maybe a computer may cut your credit limit, but a costumer service representative can fix the bug for you manually. You can always call them up and request to have your previous credit limit reinstalled. Please be polite during the appeal process.
Threaten to Cancel: If the customer representative doesn’t fulfill your request, you can ask him/her to close your account. And tell him/her that you never use a credit card with low credit limit! Banks can’t afford to lose a good customer. Last year, I requested to increase my credit limit on my Chase Freedom Card and got rejected! Then I called Chase up and asked the credit specialist to close my account. Then she increased my credit limit immediately plus a $10 rewards credit on my Chase Freedom Card!
Apply for A New Credit Card: It might help you to increase your overall credit limit. Citi is in a big trouble right now. I think most of you can avoid Citi. American Express and Discover are still in a good shape. Some credit cards from American Express and Discover are still easy to get.
In a word, if you are profitable to your credit issuer, your chance to get hurt in this credit crunch is very low.
Need tips for how to deal with customer service representatives?
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