Changes by credit card issuers coming - lower credit limits for non use of card...

[bbodb1]

In today's U.S. Mail came a letter from a credit card issuer of ours letting us know that due to insufficent use of a credit card for an extended period of time, our credit limit was being lowered. Ironically, over the past year we have paid off a few bills and our credit scores have been on the increase. Clearly, this lowering of a credit limit seems most likely to be the issuer taking steps to lessen their potential liability. I've never received such a note before - we HAVE received notices that cards would be cancelled for non use but in those cases, we had not used those cards at all for an extended period so I could understand why the credit issuers would take that action (but credit issuers never seem to understand why their card may not be used when their rewards programs are awful....)

But back to the point here - I suspect more credit issuers are going to reign in some of their potential liability in many ways (such as lower credit limits and decreased value of rewards programs) along with higher fees. It may be time to cash in as many rewards as possible before their value diminishes even further...

 

[VacationForever]

I am now using my cash back card and cancelling a bunch of high membership cost credit cards and travel rewards credit cards. Cash is king.

 

[Talent312]

Am-Ex once reviewed my CL after a long period of non-use.
They reduced me from $70K to $40K. I didn't mind at all.
As a pay-in-full guy, I would've never come close to either.

 

[bbodb1]

I am now using my cash back card and cancelling a bunch of high membership cost credit cards and travel rewards credit cards. Cash is king.

I am in that same boat right now given our Southwest Airlines CC is about to hit its anniversary. We are currently on the middle tier and if we were traveling it is a no brainer to stay on that level but at a minimum I am considering dropping back a level to save half the yearly fee.

Am-Ex once reviewed my CL after a long period of non-use.
They reduced me from $70K to $40K. I didn't mind at all.
As a pay-in-full guy, I would've never come close to either.

That is our experience as well with the Southwest Airlines CC as we pay it off monthly as well. The one drawback to a credit issuer taking this action (for us anyway) was a FICO drop since we now had less credit. That is not a big deal but if we had been in the middle of financing a home purchase and a FICO drop caused us to incur more costs with respect to a home loan I would have not been a happy customer. Fortunately, that was not the case here.

Since you are speaking of Am-Ex @Talent312 - I am curious if you are finding fewer establishments accept Am-Ex these days. Since we don't hold an Am Ex card, I don't actively look for the signs posted on establishment doors indicating what CC's they accept but it does seem (in our area anyway) I see less acceptance of Am Ex at retail establishments. I know Visa fell into disfavor awhile back as well - Wal Mart (for a time) stopped accepting Visa although I am not exactly sure of the reasons why...

 

[presley]

Wells Fargo did that to me a few years ago. I immediately canceled the card.

 

[Talent312]

Since you are speaking of Am-Ex @Talent312 - I am curious if you are finding fewer establishments accept Am-Ex these days...

I only use my two Am-Ex cards (Delta & Hilton) as branded. I have seen merchants say no Am-Ex. I assume it's their higher fees. One unusual feature: You can adjust your total CL between cards on the website.

 

[DaveNV]

My tale of woe about this sort of thing:

I sold a business a long time ago, and the buyer defaulted on the agreed sale. It pushed things into a personal bankruptcy. After the debts were discharged I worked my tail off to rebuild my credit. I got a local bank to issue me a credit card with a very small credit line, (I think it was $250), that I used, paid down, reused, paid down, and so forth for a couple of years. That credit card built itself up over several years with increased credit lines for perfect performance, until it had a $10K credit line. I was very pleased with things. The bank was sold to a larger bank, and it parlayed to an even larger bank, until it was eventually owned by Chase. I was continuing to use. pay down, and reuse that card, continuing to rebuild my credit life. Everything was fine.

I was traveling in Mexico one time, and arrived home the day the payment was due. I logged into my computer and made the payment, and thought things were fine. But not so. I'm on the west coast, and Chase's payment center is on the east coast. My payment arrived about 15 minutes past midnight, east coast time, so was technically "late." Shortly after, I received a very nasty letter from Chase with a late charge that was higher than the payment I'd made.

So I called Chase's Customer Service, explained that the payment had been made when due, in my time zone. I asked if they could please remove the late charge. "Oh no," they said, "you were late. You owe us that late fee." No amount of persuasion would convince them to see my side of things. So I paid the fee. In fact, I paid off the card, and stopped using it. By then I had a few other cards that were a better fit anyway.

Without any warning, three months later I got ANOTHER nasty letter from Chase, saying that because I wasn't using that credit card, I obviously didn't need "all that credit." So they were arbitrarily reducing my credit line from $10K to $2000, AND they were raising my interest rate because I was a credit risk. It was insulting on a level I can't even express.

I saved them the trouble, and I promptly cancelled the card. I will not deal with Chase.

Dave

 

[jehb2]

I have lots of credit cards but pretty much only use one. I also got one of those letters last week. The last time I got one of these letters was when the housing market burst in 2007. This may be a sign of things to come.

 

[bogey21]

I can see the logic in this. Credit Card Companies are afraid that out of work card holders will max out card credit lines just to survive and eventually default. Reducing Credit Lines will reduce their exposure....

George

 

[chellej]

DS was deployed several years ago and had transferred all his debt onto a 0% offer from chase before he left. When he returned he paid the card off ( and was never late with payments) and after he paid it off, Chase dropped his credit down to $2000. Really made no sense...he has a really high credit score and paid it off.....he too immediately canceled his chase Credit cards.

I have a eddie bauer card and got an email the other day that said I haven't used the card in a while and if I didn't make a purchase before July21st it would be canceled....at least they gave me a warning so I could decide if I wanted to keep it or not.

 

[am1]

Makes sense. A few years ago I had 15 cards from the US. Now 0. If you are not using the credit limit then they are not making money on the purchases to offset the risk of people running up the card and defaulting.

 

[bbodb1]

My tale of woe about this sort of thing:

I sold a business a long time ago, and the buyer defaulted on the agreed sale. It pushed things into a personal bankruptcy. After the debts were discharged I worked my tail off to rebuild my credit. I got a local bank to issue me a credit card with a very small credit line, (I think it was $250), that I used, paid down, reused, paid down, and so forth for a couple of years. That credit card built itself up over several years with increased credit lines for perfect performance, until it had a $10K credit line. I was very pleased with things. The bank was sold to a larger bank, and it parlayed to an even larger bank, until it was eventually owned by Chase. I was continuing to use. pay down, and reuse that card, continuing to rebuild my credit life. Everything was fine.

I was traveling in Mexico one time, and arrived home the day the payment was due. I logged into my computer and made the payment, and thought things were fine. But not so. I'm on the west coast, and Chase's payment center is on the east coast. My payment arrived about 15 minutes past midnight, east coast time, so was technically "late." Shortly after, I received a very nasty letter from Chase with a late charge that was higher than the payment I'd made.

So I called Chase's Customer Service, explained that the payment had been made when due, in my time zone. I asked if they could please remove the late charge. "Oh no," they said, "you were late. You owe us that late fee." No amount of persuasion would convince them to see my side of things. So I paid the fee. In fact, I paid off the card, and stopped using it. By then I had a few other cards that were a better fit anyway.

Without any warning, three months later I got ANOTHER nasty letter from Chase, saying that because I wasn't using that credit card, I obviously didn't need "all that credit." So they were arbitrarily reducing my credit line from $10K to $2000, AND they were raising my interest rate because I was a credit risk. It was insulting on a level I can't even express.

I saved them the trouble, and I promptly cancelled the card. I will not deal with Chase.

Dave

I can relate to this story Dave as it was not too long after the wife and I were married that things were financially tight for us. In our case, it was an auto lender who refused to work with us at all - in fact, it has been so long ago, I cannot recall the lender..... - but from that point on, I have avoided auto dealer connected lenders in favor of finding my own lenders for such needs. I have often wondered what effect (if any) my decisions not to use certain institutions have truly made any difference to them, but I do know it made me feel better.

 

[bbodb1]

I have lots of credit cards but pretty much only use one. I also got one of those letters last week. The last time I got one of these letters was when the housing market burst in 2007. This may be a sign of things to come.

I can see the logic in this. Credit Card Companies are afraid that out of work card holders will max out card credit lines just to survive and eventually default. Reducing Credit Lines will reduce their exposure....

George

The thought that keeps running through my mind is why more CC issuers are not actively trying to determine why use of their CC is not occurring. I've lost track of the number of CC's I have been offered, accepted due to an incentive, used, and then seldom use the card again (after earning the incentive) because the issuer thought their card had value. Or, as seems to have been the case as of late, the CC issuer cuts back or intentionally obfuscates the parameters of their rewards (or cash back) programs to render them unattractive.

I do not cancel these cards because the open (and unused) credit limits positively impact my FICO score, but beyond that they posses no value to me unless they offer some additional incentive. A good example here is an offer for a free balance transfer with low (or no) interest for a short period of time.

The bottom line for me is (at present anyway) no CC issuer seems to be doing anything to stand out from the crowd in such a manner where their card is clearly the card.

DS was deployed several years ago and had transferred all his debt onto a 0% offer from chase before he left. When he returned he paid the card off ( and was never late with payments) and after he paid it off, Chase dropped his credit down to $2000. Really made no sense...he has a really high credit score and paid it off.....he too immediately canceled his chase Credit cards.

I have a eddie bauer card and got an email the other day that said I haven't used the card in a while and if I didn't make a purchase before July21st it would be canceled....at least they gave me a warning so I could decide if I wanted to keep it or not.

@chellej - you mentioned your Eddie Bauer card and it reminded how store affiliated CC's now seem to be reducing their attractiveness as well. We have Home Depot and Lowe's CC's and for a long time it seemed like an offer (or two or three) would appear monthly in our mailbox. Now the offers are less frequent and less valuable. I'm surprised some stores still even bother issuing a store only CC.

Makes sense. A few years ago I had 15 cards from the US. Now 0. If you are not using the credit limit then they are not making money on the purchases to offset the risk of people running up the card and defaulting.

I agree with your point @am1 because in the end, it is a business and those businesses exist to make money but I would think some financial institution would be pushing the envelope (something akin to what T-Mobile is doing in the cellular market) and trying to build market share. You mention you now hold no U.S. based CC's - did you find as attractive (or better) CC's from Canadian issuers?

 

[Snazzylass]

My tale of woe about this sort of thing:

I sold a business a long time ago, and the buyer defaulted on the agreed sale. It pushed things into a personal bankruptcy. After the debts were discharged I worked my tail off to rebuild my credit. I got a local bank to issue me a credit card with a very small credit line, (I think it was $250), that I used, paid down, reused, paid down, and so forth for a couple of years. That credit card built itself up over several years with increased credit lines for perfect performance, until it had a $10K credit line. I was very pleased with things. The bank was sold to a larger bank, and it parlayed to an even larger bank, until it was eventually owned by Chase. I was continuing to use. pay down, and reuse that card, continuing to rebuild my credit life. Everything was fine.

I was traveling in Mexico one time, and arrived home the day the payment was due. I logged into my computer and made the payment, and thought things were fine. But not so. I'm on the west coast, and Chase's payment center is on the east coast. My payment arrived about 15 minutes past midnight, east coast time, so was technically "late." Shortly after, I received a very nasty letter from Chase with a late charge that was higher than the payment I'd made.

So I called Chase's Customer Service, explained that the payment had been made when due, in my time zone. I asked if they could please remove the late charge. "Oh no," they said, "you were late. You owe us that late fee." No amount of persuasion would convince them to see my side of things. So I paid the fee. In fact, I paid off the card, and stopped using it. By then I had a few other cards that were a better fit anyway.

Without any warning, three months later I got ANOTHER nasty letter from Chase, saying that because I wasn't using that credit card, I obviously didn't need "all that credit." So they were arbitrarily reducing my credit line from $10K to $2000, AND they were raising my interest rate because I was a credit risk. It was insulting on a level I can't even express.

I saved them the trouble, and I promptly cancelled the card. I will not deal with Chase.

Dave

LOL!! This might be a case of cutting your nose off to spite...

Clearly they have become one of the premier cc and have quite a few that offer nice cash back. But if you shop primarily at Costco, Citi's got you covered.

 

[bbodb1]

LOL!! This might be a case of cutting your nose off to spite...

Clearly they have become one of the premier cc and have quite a few that offer nice cash back. But if you shop primarily at Costco, Citi's got you covered.

Remember: this is Dave you're referring to here - that's a pretty solid bet!

 

[Snazzylass]

I can relate to this story Dave as it was not too long after the wife and I were married that things were financially tight for us. In our case, it was an auto lender who refused to work with us at all - in fact, it has been so long ago, I cannot recall the lender..... - but from that point on, I have avoided auto dealer connected lenders in favor of finding my own lenders for such needs. I have often wondered what effect (if any) my decisions not to use certain institutions have truly made any difference to them, but I do know it made me feel better.

Um, ok. Happy to say, that's not how I roll. Not to say that I haven't had money struggles, I have.

If I f up, I expect to pay the consequences. I will say I've had cc companies waive late fees a significant number of times. I'll never forget a Saturday morning on a car lot with my two little ones and no wedding ring on my finger. The salesman asked me how was my credit. I hesitated. He said, "Stand right there..." And, that's the last I saw of him ... until I became a lender asking the dealership for business a few months later and they became one of my accounts. Lots of class acts working there including this gentleman.

He made the right call. It all worked out. I took a different route to purchasing and it probably was for the best. My first husband really got us in the weeds financially. I had no problem with most of our creditors, and did the best I could to make things whole.

By the way, I haven't noticed any reduction in my cc's limits. I have 3 Chase cards and too many others

 

[DaveNV]

LOL!! This might be a case of cutting your nose off to spite...

Clearly they have become one of the premier cc and have quite a few that offer nice cash back. But if you shop primarily at Costco, Citi's got you covered.

I hear you. Make no mistake, by the time this happened I had several other credit card options in my wallet, and I was only using that card because it was the oldest credit card I had available. I also did nothing wrong - I made the payment on the due date - nothing had ever been said to me about timezones affecting when they consider a payment to be received. I have long since left them in the dust. What bothered me so much about what they did was their complete lack of any shred of understanding about how the situation occurred, and any willingness to consider the situation. It was SO petty, so cut and dried, it left me wondering what I could possibly have done to commit such an egregious offense. No harm, no foul - they obviously didn't want my business. And that's exactly what they have received.

The issue for me these days is that I tend to pay cash for what I buy. I don't run with any credit card debt, and I'm not interested in "gaming" credit cards to receive changeable incentives - it takes too much time and effort to stay on top of things. I do use the Costco Visa a lot, but I pay the balance before the next statement date. I get the cash back benefits, with none of the risk. I have the Alaska Airlines Visa I use to book plane tickets on Alaska, but to be honest, I haven't redeemed many Alaska air miles recently, and now that I'm moving away from the Seattle Alaska Airlines hub, I'm thinking of canceling the card, due to the annual fee. My other cards have no annual fee.

Dave

 

[bogey21]

Back in 2008 I had one that pissed me off. I had a balance of about $8,000 on my Amex Card. I had never been late on a payment to them or anyone else for that matter in over 30 years. I paid it down to $0 figuring I would start using it as my primary card. Within days they closed my account with no explanation...

George

 

[am1]

I agree with your point @am1 because in the end, it is a business and those businesses exist to make money but I would think some financial institution would be pushing the envelope (something akin to what T-Mobile is doing in the cellular market) and trying to build market share. You mention you now hold no U.S. based CC's - did you find as attractive (or better) CC's from Canadian issuers?

No I just have no US sourced income to pay the cards, plus I have more points and miles then needed even before the pandemic. I concentrate my spend on an airline card we do use a lot and get silver status for holding it. I applied for an amex Platinum card last year in a different country as it has good benefits but still being worked on. No 60 second approvals here.

 

[Snazzylass]

I hear you. Make no mistake, by the time this happened I had several other credit card options in my wallet, and I was only using that card because it was the oldest credit card I had available. I also did nothing wrong - I made the payment on the due date - nothing had ever been said to me about timezones affecting when they consider a payment to be received. I have long since left them in the dust. What bothered me so much about what they did was their complete lack of any shred of understanding about how the situation occurred, and any willingness to consider the situation. It was SO petty, so cut and dried, it left me wondering what I could possibly have done to commit such an egregious offense. No harm, no foul - they obviously didn't want my business. And that's exactly what they have received.

The issue for me these days is that I tend to pay cash for what I buy. I don't run with any credit card debt, and I'm not interested in "gaming" credit cards to receive changeable incentives - it takes too much time and effort to stay on top of things. I do use the Costco Visa a lot, but I pay the balance before the next statement date. I get the cash back benefits, with none of the risk. I have the Alaska Airlines Visa I use to book plane tickets on Alaska, but to be honest, I haven't redeemed many Alaska air miles recently, and now that I'm moving away from the Seattle Alaska Airlines hub, I'm thinking of canceling the card, due to the annual fee. My other cards have no annual fee.

Dave

Um, just file it under sh*t happens. Now that you mentioned it, I think something similar happened to me on a cc I still have opened. Seemed the due date was a Sunday that month, maybe even Christmas, as I recall. So, yeah, turned out my pymt was late. Lesson learned. I still have the cc and would like to keep open, too.

The reality is that all cc issuers have to balance profits and fighting for market share. There's a lot of uncertainty in the economy right now. So, lenders are being proactive. They sweep a wide net.

 

[DaveNV]

Um, just file it under sh*t happens. Now that you mentioned it, I think something similar happened to me on a cc I still have opened. Seemed the due date was a Sunday that month, maybe even Christmas, as I recall. So, yeah, turned out my pymt was late. Lesson learned. I still have the cc and would like to keep open, too.

The reality is that all cc issuers have to balance profits and fighting for market share. There's a lot of uncertainty in the economy right now. So, lenders are being proactive. They sweep a wide net.

I don't disagree. And this was more than 20 years ago - it's old and dusty and dead news by now. But at the time, the singular lack of compassion is what threw me - nothing in any of the information I had on the account said payments were factored on East Coast Time. I had years of perfect payment history with them, and this one ridiculous situation ruined things? At the end of the day, I know it's a tiny potatoes thing - I didn't even need the card by then. But the whole situation at the time I felt could have been handled differently, and chances are, I'd have stayed a loyal customer. (I tend to be pretty loyal when I'm happy, but I vote with my feet if I'm not.) It all left me with a very sour taste regarding Chase.

I felt somewhat of a similar thing about Verizon cell phone service. I was a loyal customer for over twenty years. I paid (and some would say "overpaid") every month all those years - never an issue, never a smidge of trouble to them. As I was getting ready to retire, and trying to reduce my monthly expenses, I took a long look at my cell phone use and expenses, and started shopping around to see what I could find that provided the same level of service for lower cost. I ended up switching to Consumer Cellular, where I cut my cell bill by about 75%. When I had asked Verizon if they could do anything to reduce my bill, to keep me as a customer, all I heard was crickets. Not a word from them. I don't think I even got a "We appreciate your business" kind of comment. So it goes.

Dave

 

[Luanne]

Um, just file it under sh*t happens. Now that you mentioned it, I think something similar happened to me on a cc I still have opened. Seemed the due date was a Sunday that month, maybe even Christmas, as I recall. So, yeah, turned out my pymt was late. Lesson learned. I still have the cc and would like to keep open, too.

The reality is that all cc issuers have to balance profits and fighting for market share. There's a lot of uncertainty in the economy right now. So, lenders are being proactive. They sweep a wide net.

A few years back I was late with a payment to Chase. I pay online and for some reason while I thought I had set up a payment, I hadn't. I didn't realize there was a way I could check online to see if I'd set it up or not. I was used to B of A emailing me that the payment had been made. So anyway, I was a day late. I called Chase, pleaded my case, and they reversed the late charge. Maybe they just like me better.

 

[controller1]

I received notice yesterday from Chase they were decreasing my credit limit by 50% on a United Airlines credit card which I rarely use.

 

[mbh]

I received notice yesterday from Chase they were decreasing my credit limit by 50% on a United Airlines credit card which I rarely use.

Same for me. Notice yesterday from Chase that my UA credit limit reduced by 20%. Hardly ever use the card.

 

[bogey21]

It is all to cut their exposure to those out of work because of COVID-19 and/or the economy...

George