Credit Card Debt

What Do I Need to Do to Get My Credit Card Limits Increased?

credit card frustrated female
Written by Steve Rhode

Question:

Dear Steve,

I had attained a credit score right around 700. Within the past 3-4 months, mostly due to COVID-19, I had to take creditors up on their offer to forego a few payments.

Suddenly, I had 2 of my major creditor cards reduce my credit line (one went from $21,600 to $8,900, the other went from $24,000 down to less than 10K). Obviously, this threw my utilization percentage sky high and dropped my credit score to 602. I now am struggling to try to get that down to less than 30-40%.

Based on my scenario above, can you recommend the best possible way to consolidate these cards and when will I be able to ask for an increase in my credit limit on these cards?

Thank you so much.

Sandy

Answer:

Dear Sandy,

Thank you for sending me your question.

The reduction in credit limits can be due to several reasons, from requesting the payment holiday to the lenders wanting to reduce their overall risk on their portfolio.

While it is unfortunate that this happened, it could also occur on any given day.

Credit limits are not permanent and may be fluid. You will find that when you read the cardholder agreement, you entered with the creditor, that the lender acted within the terms. I would honestly be shocked if this was the once in ten thousand times they screwed up.

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I might give lenders a lot of grief, but the original creditors typically do an excellent job of abiding by the contract’s terms because they wrote it.

So this leads us into the second issue, carrying balances. It’s not the limit reduction that’s hurting you but the fact you are carrying debt on cards that you cannot pay off.

If you are looking for a way to pay off the cards at a lower interest rate and you’d be okay if the cards were closed, then look at a credit counseling program. In a credit counseling program, the non-profit agency has existing terms established with the major creditors. Your interest rate will be reduced, and you will make one payment to the credit counseling group. That will feel like a consolidation.

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You could try to apply for a debt consolidation loan, but the interest rates will be high.

As far as what you can do to get your creditors to increase the credit limits again, the only power you over them is to ask for an increase. It is entirely up to whatever the internal business process will grant. Nobody outside of the creditor has any power over them to raise your limit.

One issue to keep in mind is that while you are in a rush to pay down the balances, don’t forget to direct some of your extra money each month to a savings account. I’ve watched far too many people over the years get in a frantic hurry to pay off the debt that when an unexpected expense arrives, it lands back on a credit card and erodes any progress made.


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About the author

Steve Rhode

Steve Rhode is the Get Out of Debt Guy and has been helping good people with bad debt problems since 1994. You can learn more about Steve, here.

3 Comments

  • A year or two ago, Bank of America lowered my credit limit by $750. Given that I’ve had the card for years, my credit limit has been more than $20,000 for years, and I’ve never missed a payment or been late, I call that petty. I complained — forcefully — requesting a restoration of the $750 and an apology for mistreating an always-excellent customer. I got neither. But I did get asked to be on a panel of BoA customers. So, about once a month or so, I fill out a questionnaire. In response to questions about whether I would recommend BoA to family and friends, my answer is always a resounding NO! — and I use the comment box to explain BoA’s petty behavior — and to remind BoA that I have plenty of choices when it comes to choosing financial institutions. So, thanks, Steve, for another opportunity to call out BoA for its petty behavior, a sure way to alienate excellent customers.

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