But as economic uncertainties abound, credit card companies have been reducing available credit to limit their own losses.
What can you do if your credit limit has been slashed?
(Wait, what is your credit limit, anyways?)
Were here to help.
How to Deal With a Credit Limit Decrease
Did your card issuer lower your credit limit?
Probably not as good as youd like.
It always seems like an uphill battle to build (and keep) a decent amount in savings.
But what if your car breaks down, or you have a sudden medical bill?
So lets start with understanding what a credit limit is.
What Is a Credit Limit?
(Yeah, dont do that.)
To figure your utilization, divide your total balance by your credit limit.
Lets look at an example.
Say your balance is $700 on a card with a $3,000 credit limit.
So $700/$3,000 = 23.3% credit utilization.
So instead of burying your head in the sand, take this moment to become more proactive.
It doesnt necessarily have to be day-to-day, but it could be a few times a week.
Dont panic if your credit card limit has been lowered it doesnt mean thats permanent, McClary said.
The next step is to hit up the creditor and find out why.
Ask for specifics about why the credit card company took this action:
Is the limit decrease correct?
(Mistakes can happen, after all.)
Do you have a history of missed or late payments?
Does your length of time as a customer affect this decision?
Was there a specific trigger that caused them to lower your limit?
Youll want this information as you decide your next move.
From there, you have a few options.
Not gonna lie: This one might be a long shot.
But consider starting by asking your credit card company to increase your credit limit to the previous amount.
Ask if and how it’s possible for you to have them reverse that decision, McClary said.
Your credit card issuer isnt the only company in town, so consider shopping around for azero-interest balance transfer.
Applying for a new card might not be an option if youve recently lost income.
Lets go back to our original example.
Each individual has to weigh what theyre willing to accept.
Every little bit helps.
Then you’re able to go into those negotiations a little bit better prepared.
And then, the skys the (credit) limit.
Tiffany Wendeln Connors is a staff writer/editor at The Penny Hoarder.
Readher bio and other work here, then catch her on Twitter @TiffanyWendeln.
It sounds appealing right?
Check it out here!
