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Falling Credit Limits

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Lately, I have been hearing stories about credit card companies reducing credit limits for some customers. They have been doing it to people with balances, and also to others who usually pay off the balance each month.


So keep an eye on your credit limit and the amount you charge on your cards. In some cases, they reduce it enough that the person only has a few hundred dollars leeway. If they have become reliant on charging items on their credit cards, this can cause big problems.


One case I found online was a credit limit was cut from $12,300 to $1,900—an 85 percent cut—and it left the customer with $400 leeway on his credit card.


Another problem with this is that it could do damage to your credit score. The percentage of credit available that a consumer actually uses accounts for about 30 percent of your credit score.


If all of a sudden you go from using 35-40 percent of available credit to 90 percent, it’ll have a huge effect on your credit score.


Some consumers think they are doing the right thing by paying down their debts, and then are penalized by having their credit limit decreased.


This is another reason to keep an eye on how much you charge on your credit cards. 

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