Credit Card Horror Stories: Tales of Credit Limit Reductions and Account Closures
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90 percent reduction
I received a Macy’s Visa back in 2005 that I didn’t even recall applying for. The credit limit was $5,000. Nevertheless, I didn’t use it until this year. I had planned a trip to Disney in Florida and wanted to use it then. I called to activate it and found out that my limit was reduced to $500. How drastic was that?!
– Patricia S.Bruised credit scores
I am 49 years old and have been employed since 1993, when I graduated from law school. My wife and I have lived in the same home since 2000. Neither my wife nor I have any late payments on any obligation we have had over the last 10 years or more. We do, however, have a good deal of credit card debt, very nearly all of it at 4.99 percent interest or less. Our annual household income is over $90,000 and our total monthly debt payments, including my student loans, our credit cards and our mortgage, is about $2,400. My wife’s credit score was about 720 and mine about 690.A few months ago, Bank of America advised rather abruptly that it was cutting our cards’ credit lines by a total of about $30,000. This increased our credit utilization ratio rather dramatically, and it has begun affecting our credit scores. My wife’s score has dropped by more than 50 points and mine by an even greater amount. In turn, I believe other credit issuers will begin cutting our credit limits. We just received notice from American Express, for example, that my wife’s card limit through them will be cut by over $5,000. No doubt actions such as this will further depress our credit scores.
As a consequence of their actions, my wife and I are seriously considering severing our relationships with Bank of America and American Express. Although this sounds like the proverbial cutting off of one’s nose to spite one’s face, I don’t know what else to do to express my displeasure with these companies other than discontinuing their opportunities to profit from my patronage.
– Doug H.
Bankrate.com did a story on Friday (sorry for not getting to this earlier) highlighting some of the same stuff that I’ve been pointing out here for weeks. More and more customers are experiencing credit-limit reductions and account closures. Over the course of the past few weeks, Bankrate.com readers have been chiming in with their own credit-card tales. Many of their stories will seem familiar.
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Comments
Comment by Joseph Archibald I understand Mr Englert’s point of view above but surely if you control the credit card rather than the credit card controlling you (i.e. pay off your balance every time its due) then there is only benefit to be had from having a credit card.
Mr Rhode, I suspect that the banks are cutting credit as a general rule right now and we as the consumer have to “ride” through the tough times until the sun comes out again in future. I know for a fact that American Express have and do still offer some of the most competitive cards on the credit card market so it may be wise to maintain your relationship with them for now? (I do not represent American Express in any way, by the way).
Comment by Rob I don’t agree with you about these cards. Wouldn’t just saving for that trip be a better idea? If you need to use cards, you can’t afford to go. You are planning to spend money you don’t have. You are delusional to think that you control those cards. They deliberately set you up to screw you and keep you trapped in debt. Get rid of those evil things and pay cash.
Comment by richie Hi there: Ready for your wake-up call?
Isnt it sobering to receive a first class lesson from your friendly bank/lender/credit card issuer. Pay attention because this is for you. Did you actually beleive their marketing campaigns and hypnotic suggestions as to how they love you and want to help you? How they will always be there for you? Customer service? You count count on us? Your in good hands? etc etc? Welcome to reality. This is a business transaction. When things go wrong, they are not here to help. They dont know you or like you. They are not your friends. Jesus is no where to be found. This is strictly pay to play dynamics. They want their money or else. Fail to keep your end of it, and they will mark your credit score for life and hire people to hound you until paid. Some will force you into bankruptcy and not rest until you are homeless and penniless. When the system fails, you are the one to be destroyed and cajoled. Why doesnt the other party have to suffer. Demanding high interest rates and having to be told my way or the highway when things go wrong doesnt sound just to me. The sword cuts both ways. If the system has failed, repair it. Do not destroy the people who created the system while you are doing it. People are the value and should be treated accordingly. We search for life on other planets and do not even respect what we have right under our noses. What madness! Learn to live with what you have, seek simplicity and discover the mystery of the riddle of “less is more”. The system be damned.
Comment by Lisa This isn’t funny or a “wake-up call” for some people. It’s not always people living on credit or beyond their means! My husband’s ex-wife ran up their credit card to $18,000, which he paid off with cash. Then we find out that she made him an authorized user on accounts that she is now delinquent on. He had a FICO score of 801 a year ago and now has credit cards lowering limits and even closing accounts because of her delinquincies being on his credit, too. These companies won’t remove his name–they say she has to because she is the primary owner. We are currently disputing it with Equifax, but in the meantime, cards are closing that have zero balances and hadn’t been used in years. Then other cards will lower limits or close because his debt to ratio is too high–DUH! Of course it’s too high, they are yanking thousands of dollars in available credit! He has never had a late payment in the last 10 years, has a stable job–military for past 10 years–and makes a good income. Now my credit is being hurt and yanked because of his situation because we are married and share joint accounts. Please open your mind and don’t be so judgemental of others. Also remember that people are losing jobs everyday and need credit right now.
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I just read the article about people getting upset that their credit limits have been reduced. that is so funny! Those cards were designed to turn us into a slave to a bank. A reduced credit limit will save us from ourselves. Save for what you want and you will be better off. A credit card is not an emergency fund. That is what gets you into trouble. Credit cards are a modern version of slavery.