Home New mexico economy Why credit card companies are lowering limits and what you can do about it – WSOC TV

Why credit card companies are lowering limits and what you can do about it – WSOC TV


CHARLOTTE, NC — In the first four months of 2021, nearly one in three credit cardholders had their credit limit reduced or their account closed, according to a new report from LendingTree.

Matt Schulz works for LendingTree and he said this happened to him.

“I closed my second oldest map,” he told Action 9’s Jason Stoogenke.

“[The credit card companies] were certainly concerned that people in the middle of a pandemic who had just lost their jobs, who were very concerned about their finances, would start increasing those credit card bills and maybe not be able to pay them back,” Schulz said.

It can also happen to people who spend less.

The LendingTree survey showed that companies can also target inactive or low-use credit cards for limit reductions or closure.

Not only can this come as a surprise, but it can also hurt your credit score. Your score depends on the percentage of available credit you use, so even if you spend the same amount, if your credit limit goes down, you use more of it.

For example, if you spend $1,000 on your credit card and your credit limit is $10,000, you are only using 10% of your available credit. But if the company lowers the limit to $2,000 and you still spend the same amount, you are now using 50% of your available credit.

Schulz said there are ways to protect your card from being closed or the limit reduced.

First, he recommends asking the credit card company to put your limit back where it was. That’s what Schulz did when it happened to him, and he said it worked.

“If you don’t ask, you’re not going to get it. It sure is,” he said.

“It’s really important for people to understand that they have more power over their credit card issuer than they realize, especially in these really, really competitive times. But so few people actually use it,” he said.

“A lot of times, all you have to do is pick up the phone, call your credit card issuer and ask for that break, ask for that lower rate, ask for the higher credit limit, and your chances of success are much better. than you think they are. Just pick up the phone,” he added.

If that doesn’t work, here are some other things you can do to protect your credit score:

Spread out your spending on other credit cards so you don’t use more than 30% of one card.

Make an additional payment in the middle of the payment cycle so that your statement is lower.

Consider increasing your limit on your other cards, but be careful. First, find out if they do a “rigorous credit check” as this could affect your credit. Ask for a “gentle verification”.

(WATCH: Child Tax Credit: Here’s How It Works)