Chase reducing credit card limits

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runswithscissors
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Chase reducing credit card limits

Post by runswithscissors »

I have a Chase Freedom card and recently received a letter from Chase that states I have spent far below my available credit limit over the last 12 months and as a result will see a reduction to my limit by over 50% in 30 days. The reduction is quite drastic... from nearly $40K to the low teens. This will reduce my total aggregate credit card limit by over 15%. My score has remained in the low 800's for years and I have never received a credit card limit reduction in my life; I assume this is related to the pandemic.

Has anyone else received letters that their limits will be reduced?
sailaway
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Re: Chase reducing credit card limits

Post by sailaway »

This is what many of us have been warning about whenever folks say they will just use credit as their emergency fund. CC limits get cut and HELOCs get cancelled when the economy isn't thriving.

If you plan to use it, you may be able to contact them, otherwise, I would just let it go down.
UpperNwGuy
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Re: Chase reducing credit card limits

Post by UpperNwGuy »

Many lenders have been reducing credit card limits since the COVID-19 crisis began. They use a variety of algorithms to assess the risk of the credit cards they have issued. The letters they send out to the cardholders tend to be form letters citing one of several standard reasons, and the reason may seem arbitrary. The bottom line is that they want to get their own risk measures under better control as the nation's financial situation worsens. My advice: use all your cards regularly but never carryover an unpaid balance. Try to find that sweet spot between high utilization and excessively low utilization.
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mmmodem
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Re: Chase reducing credit card limits

Post by mmmodem »

Not mine yet but most of my credit card limits except one are in the teens anyway including my Chase Freedom Card. My score is in the 800's. If that works out to 15% reduction of your combined credit limit then you're still at double mine. I think your score will be fine.
vested1
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Re: Chase reducing credit card limits

Post by vested1 »

UpperNwGuy wrote: Sun May 31, 2020 4:22 am Many lenders have been reducing credit card limits since the COVID-19 crisis began. They use a variety of algorithms to assess the risk of the credit cards they have issued. The letters they send out to the cardholders tend to be form letters citing one of several standard reasons, and the reason may seem arbitrary. The bottom line is that they want to get their own risk measures under better control as the nation's financial situation worsens. My advice: use all your cards regularly but never carryover an unpaid balance. Try to find that sweet spot between high utilization and excessively low utilization.
When we moved last year our credit dove by over 200 points to the low 600's. We had two hard inquiries, one without our knowledge, because we were shopping for a new car, and ran up our Chase card to 50% of the limit during the drive across country. We paid off the card before the due date, as we do every month.

The explanation for the credit hit was the two inquiries and the high utilization for two weeks during a billing cycle. Our score just jumped back up to the high 800's after a year at a lower level. We've always paid that main card off every month and never carry a balance on any card. Our score now says we at 10% utilization, and if Chase tries to lower our limit I'll start using a different one.

My suggestion would be to keep utilization of any card under 20%, even if not carrying a balance and to utilize multiple cards, zeroing them out every month. In my opinion credit agencies have too much power, and make the wrong assumptions about credit worthiness by putting everyone in the same box. Paying off your bills in full every month should automatically give you the highest rating IMHO, but I guess that's not how they see it.
afan
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Re: Chase reducing credit card limits

Post by afan »

Interesting. Since a high credit score depends in part on low overall usage of credit cards compared to one's limit, this should produce a wave of cuts in scores.

I don't see how using multiple cards would help. If you use 10% of your total limit and one of the cards cuts your limit, then your utilization percentage just went up.

Agree this is a caution against counting on credit cards for emergency funds. They may not be there when you need them.
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MathIsMyWayr
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Re: Chase reducing credit card limits

Post by MathIsMyWayr »

The utilization rates of our credit cards hover around 5% for Chase and 10% for Costco Citi cards for years. No change in the credit limits.
mptfan
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Re: Chase reducing credit card limits

Post by mptfan »

vested1 wrote: Sun May 31, 2020 5:17 amPaying off your bills in full every month should automatically give you the highest rating IMHO, but I guess that's not how they see it.
The credit agencies do not know that you pay your bills in full every month so even if they wanted to give you a high credit rating because of that there is no way they could. You look the same to them compared to someone who carries a balance.
2cents2
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Re: Chase reducing credit card limits

Post by 2cents2 »

vested1 wrote: Sun May 31, 2020 5:17 am
UpperNwGuy wrote: Sun May 31, 2020 4:22 am Many lenders have been reducing credit card limits since the COVID-19 crisis began. They use a variety of algorithms to assess the risk of the credit cards they have issued. The letters they send out to the cardholders tend to be form letters citing one of several standard reasons, and the reason may seem arbitrary. The bottom line is that they want to get their own risk measures under better control as the nation's financial situation worsens. My advice: use all your cards regularly but never carryover an unpaid balance. Try to find that sweet spot between high utilization and excessively low utilization.
When we moved last year our credit dove by over 200 points to the low 600's. We had two hard inquiries, one without our knowledge, because we were shopping for a new car, and ran up our Chase card to 50% of the limit during the drive across country. We paid off the card before the due date, as we do every month.

The explanation for the credit hit was the two inquiries and the high utilization for two weeks during a billing cycle. Our score just jumped back up to the high 800's after a year at a lower level. We've always paid that main card off every month and never carry a balance on any card. Our score now says we at 10% utilization, and if Chase tries to lower our limit I'll start using a different one.

My suggestion would be to keep utilization of any card under 20%, even if not carrying a balance and to utilize multiple cards, zeroing them out every month. In my opinion credit agencies have too much power, and make the wrong assumptions about credit worthiness by putting everyone in the same box. Paying off your bills in full every month should automatically give you the highest rating IMHO, but I guess that's not how they see it.
That is crazy!
mptfan wrote: Sun May 31, 2020 7:17 am
vested1 wrote: Sun May 31, 2020 5:17 amPaying off your bills in full every month should automatically give you the highest rating IMHO, but I guess that's not how they see it.
The credit agencies do not know that you pay your bills in full every month so even if they wanted to give you a high credit rating because of that there is no way they could. You look the same to them compared to someone who carries a balance.
If this is so, it tells me is that their formula for analyzing credit risk is seriously flawed.
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BrandonBogle
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Re: Chase reducing credit card limits

Post by BrandonBogle »

2cents2 wrote: Sun May 31, 2020 8:37 am
mptfan wrote: Sun May 31, 2020 7:17 am
vested1 wrote: Sun May 31, 2020 5:17 amPaying off your bills in full every month should automatically give you the highest rating IMHO, but I guess that's not how they see it.
The credit agencies do not know that you pay your bills in full every month so even if they wanted to give you a high credit rating because of that there is no way they could. You look the same to them compared to someone who carries a balance.
If this is so, it tells me is that their formula for analyzing credit risk is seriously flawed.
It is what it is. There is, however, nothing stopping someone from paying their balance to $0 BEFORE the statement cuts each month.
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Info_Hound
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Re: Chase reducing credit card limits

Post by Info_Hound »

I recently received a similar letter from Chase. I never carry a balance on any credit card, ever. Credit score in the high 800s.

Recently I purchased replacement windows for the whole house and used the Chase card. The cash back feature helped to pay for a couple of the smaller windows. I assumed Chase had figured out that they were paying me (over years) to hold their card as I had paid no interest to them. While disappointing, I have other cards with a higher limit and will use them instead when needed.

My thought was what does the Chase action do to my credit score since it was my oldest card and with a high limit?
tibbitts
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Re: Chase reducing credit card limits

Post by tibbitts »

I haven't been notified but most of my limits are in the low four-figure range already.
TravelGeek
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Re: Chase reducing credit card limits

Post by TravelGeek »

runswithscissors wrote: Sun May 31, 2020 3:05 am
Has anyone else received letters that their limits will be reduced?
Apparently affecting others... here is a Doctor of Credit story from today:

https://www.doctorofcredit.com/chase-cu ... rd-limits/

According to Informed Delivery yesterday I have a letter from Chase waiting for me in the mailbox. :shock:
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8foot7
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Re: Chase reducing credit card limits

Post by 8foot7 »

BrandonBogle wrote: Sun May 31, 2020 8:50 am
2cents2 wrote: Sun May 31, 2020 8:37 am
mptfan wrote: Sun May 31, 2020 7:17 am
vested1 wrote: Sun May 31, 2020 5:17 amPaying off your bills in full every month should automatically give you the highest rating IMHO, but I guess that's not how they see it.
The credit agencies do not know that you pay your bills in full every month so even if they wanted to give you a high credit rating because of that there is no way they could. You look the same to them compared to someone who carries a balance.
If this is so, it tells me is that their formula for analyzing credit risk is seriously flawed.
It is what it is. There is, however, nothing stopping someone from paying their balance to $0 BEFORE the statement cuts each month.
Very true. Also nothing stopping the bureaus from adding a Boolean “was new balance paid in full last cycle” on each trade line.
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BrandonBogle
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Re: Chase reducing credit card limits

Post by BrandonBogle »

8foot7 wrote: Sun May 31, 2020 11:05 am
Very true. Also nothing stopping the bureaus from adding a Boolean “was new balance paid in full last cycle” on each trade line.
In a way, there is. The last time I looked at my credit reports, it included what my payment $$$ paid each month we’re. However, that doesn’t seem to be accounted for in the scoring algorithms and it may be an optional field for all we know.
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Watty
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Re: Chase reducing credit card limits

Post by Watty »

runswithscissors wrote: Sun May 31, 2020 3:05 am The reduction is quite drastic... from nearly $40K to the low teens.
If you have multiple credit cards with Chase then that may be part of the reason they are reducing your credit limit.

I suspect what is happening is that they are starting to see people that had very high credit card limits that they never used that are now running the credit card up right before they declare bankruptcy or run into other financial trouble so they are trying to limit their exposure to one person.

It would be very rare for someone to actually need a $40K credit card limit, especially if you are not routinely using it a lot each month. It would likely take a pretty bad situation for you to run up $40K in debt on that card so they are taking a lot of risk when there is little chance that you would use that $40K in credit if you were not having big financial problems.

I don't remember the exact circumstances but I once had around four credit cards with a company, probably Chase, and I got a new one for the sign up bonus and a new rebate program that looked good. As I recall I got the card but the credit limit was low so I called then to ask if they could increase it. It turned out that the reason it was low was that they were looking at all the credit cards I had with them combined and I was at the insanely high combined limit that they would give me. I was able to have them reduce the limit on a different credit card so they could increase the credit limit on my new credit card.

It was a lot lower but a week or so ago they also reduced the credit card limit on a airline credit card my wife has but I don't think she has ever had more than about a thousand dollar balance on it, which was paid off each month.
frankandbeans
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Re: Chase reducing credit card limits

Post by frankandbeans »

My Freedom, which I only use for 5% categories, was cut down from $20k to $10k a couple of months ago. I also hold a CSP with a $30k limit, so the theory that they want to limit debt exposure per individual makes sense. (Of course, they also hold a $600k+ mortgage note....)
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VictoriaF
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Re: Chase reducing credit card limits

Post by VictoriaF »

I have nine Chase credit cards, each of which has a low limit. I have not received any letters from Chase (yet).

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Kevin M
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Re: Chase reducing credit card limits

Post by Kevin M »

afan wrote: Sun May 31, 2020 6:32 am I don't see how using multiple cards would help. If you use 10% of your total limit and one of the cards cuts your limit, then your utilization percentage just went up.
According to credit karma:
  1. Credit card use matters most for each individual card.
  2. The average use across all your cards is important, too.
  3. Try to stay under 30% (under 10% is even better!) — and remember, you don’t need to carry any credit card debt to build your credit.
Noting the underlined part, reducing utilization of say 20% for one card to 10% each for two cards should increase your credit score.

I've seen this in my credit karma scores in recent months, with the score rising or falling by more than 10 points in a month based on fluctuations in the utilization of my main credit card, even though my overall utilization (across all cards) currently is only 4%.

I have two Chase Freedom cards that I use only for the 5% categories, so my balance on either will never be higher than $1,500 (the max on which you get the 5% in a quarter), which currently is very low utilization; they have not yet cut my limit on either card, but of course if they do that would increase the utilization on these cards in quarters with categories I can take advantage of.

However, what I usually do is use one of the Freedom cards until I hit the $1,500 limit, then switch to the other. An easy alternative to reduce utilization would be to use them both each month so that the utilization is split between them, per the first point of this reply.

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stan1
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Re: Chase reducing credit card limits

Post by stan1 »

As a passive Chase shareholder (through Total Stock Market Fund) I'm fully on board with them taking steps to manage risk.
rockstar
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Re: Chase reducing credit card limits

Post by rockstar »

Higher utilization rates thanks to lower credit limits will impact people's scores. Of course, limits have been rising much faster than spending over the last couple of years, so scores have been artificially high.

https://www.newyorkfed.org/microeconomics/hhdc.html
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Re: Chase reducing credit card limits

Post by Northern Flicker »

Info_Hound wrote: Recently I purchased replacement windows for the whole house and used the Chase card. The cash back feature helped to pay for a couple of the smaller windows. I assumed Chase had figured out that they were paying me (over years) to hold their card as I had paid no interest to them. While disappointing, I have other cards with a higher limit and will use them instead when needed.
They are making money from your card usage. There are transaction fees, not just interest on balances, and the transaction fees on cash back cards generally have been higher than on non-reward cards. Thus, the vendors are paying a significant part of the reward (though likely passed on to their customers through slightly higher prices).
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Katietsu
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Re: Chase reducing credit card limits

Post by Katietsu »

This happened to be during the 2008-2009 financial crisis. I am not surprised the banks are responding similarly now.
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crystalbank
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Re: Chase reducing credit card limits

Post by crystalbank »

I received a similar letter yesterday for my Chase Sapphire and they cut my limit by about 50%. It stated that to increase the limit again in the future they'd have to do a credit pull. I'm not necessarily mad at them and I really don't use that card much anyways and don't pay any annual fee.
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Thrifty Femme
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Re: Chase reducing credit card limits

Post by Thrifty Femme »

Try reallocating the credit limit being slashed to other Chase cards before the slashing occurs. This worked for me when Chase sent a letter saying they were closing my card with the highest credit limit.
texas lawdog
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Re: Chase reducing credit card limits

Post by texas lawdog »

I received a similar letter from Chase the other day saying they were going to lower my limit on my SWA cc - was somewhat surprised as I do use this card each month for a minor subscription charge (Netflix) to keep credit fresh.

Don't really need the extra credit but enjoy having plenty of available and have a very high credit score (840), so I'm puzzled about why they suddenly made the change. Might leave a negative review the next time I'm asked to review one of their products, as this is not really a positive customer experience between Chase and me and would warn others before selecting them for credit.
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Re: Chase reducing credit card limits

Post by Broken Man 1999 »

Not only Chase is reducing credit card limits.....

From link https://www.doctorofcredit.com/barclays ... r-lose-it/

Barclays has sent out a letter to some cardholders stating that they have 30 days to use their card otherwise the card would be closed for inactivity. Barclays doesn’t seem to be the only ones to be ramping up card closures due to inactivity, but it is nice they are sending out letters before closing the card. It’s always a good idea to put a purchase or two on a card every now and then to prevent it from getting closed due to inactivity and I suspect this will become even more important due to COVID-19 as card issuers try to limit their exposure on cards that aren’t generating any revenue.

I have a Barclays card (Priceline Visa) that is my heaviest used card as it has a 2% rebate for everything. I charge anywhere from $2,000 to $5,000 per month, so I see no danger of getting cancelled. I use the Priceline card for anything I can't find a better rebate than 2% with my other cards.

I am thinning out the number of cards I have, from 7 to 5 on the next round. One is an American Express card that I received as an AE replacement when Costco went with Citibank. I haven't seen anything that really adds to my rewards from American Express, so it won't be replaced by another AE card. And, I'm dumping my PayPal credit line. No physical card, just a credit line.

That will shave $30,100 of my total credit available, and still leave an amount that is ridiculous. I have only asked once in my credit lifetime for an increase of limit. Yet, over time the credit limits rose and rose and rose.

Once my new front door is paid for my Home Depot card is going to be history. I have a 0% deal on the door for a few more months. Another reduction of $18,000 of credit available.

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mptfan
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Re: Chase reducing credit card limits

Post by mptfan »

2cents2 wrote: Sun May 31, 2020 8:37 am
mptfan wrote: Sun May 31, 2020 7:17 am
vested1 wrote: Sun May 31, 2020 5:17 amPaying off your bills in full every month should automatically give you the highest rating IMHO, but I guess that's not how they see it.
The credit agencies do not know that you pay your bills in full every month so even if they wanted to give you a high credit rating because of that there is no way they could. You look the same to them compared to someone who carries a balance.
If this is so, it tells me is that their formula for analyzing credit risk is seriously flawed.
I used to think that too, but I've come to realize I was looking at it all wrong. I came to realize that the credit scoring system is not designed to determine how good I am at handling my finances and how smart I am to avoid paying credit card interest. It's not a "I'm smart at handling my finances" score...it is a "credit score" and the credit scoring system is designed to benefit issuers of credit, not consumers, so that credit issuers can determine who are their best customers.

1) If you have a credit card with a $10,000 credit limit and you owe $4,000 on that card, from a utilization standpoint a potential lender does not care whether you are carrying a balance or you regularly pay off the balance every month, either way you have a 40% utilization and you still owe the same amount of money and you have the same credit limit.

2) Potential lenders actually prefer customers who carry a balance because they make more money by charging interest, so from their point of view there is no reason why someone who regularly pays off the balance should have a higher score than someone who carries a balance. If anything it is the other way around...someone who regularly carries a credit card balance and pays their bills on time while paying interest every month is a more attractive customer than someone who regularly pays off their credit card balance each month.
j0nnyg1984
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Re: Chase reducing credit card limits

Post by j0nnyg1984 »

Broken Man 1999 wrote: Sun May 31, 2020 3:12 pm Not only Chase is reducing credit card limits.....

From link https://www.doctorofcredit.com/barclays ... r-lose-it/

Barclays has sent out a letter to some cardholders stating that they have 30 days to use their card otherwise the card would be closed for inactivity. Barclays doesn’t seem to be the only ones to be ramping up card closures due to inactivity, but it is nice they are sending out letters before closing the card. It’s always a good idea to put a purchase or two on a card every now and then to prevent it from getting closed due to inactivity and I suspect this will become even more important due to COVID-19 as card issuers try to limit their exposure on cards that aren’t generating any revenue.

I have a Barclays card (Priceline Visa) that is my heaviest used card as it has a 2% rebate for everything. I charge anywhere from $2,000 to $5,000 per month, so I see no danger of getting cancelled. I use the Priceline card for anything I can't find a better rebate than 2% with my other cards.

I am thinning out the number of cards I have, from 7 to 5 on the next round. One is an American Express card that I received as an AE replacement when Costco went with Citibank. I haven't seen anything that really adds to my rewards from American Express, so it won't be replaced by another AE card. And, I'm dumping my PayPal credit line. No physical card, just a credit line.

That will shave $30,100 of my total credit available, and still leave an amount that is ridiculous. I have only asked once in my credit lifetime for an increase of limit. Yet, over time the credit limits rose and rose and rose.

Once my new front door is paid for my Home Depot card is going to be history. I have a 0% deal on the door for a few more months. Another reduction of $18,000 of credit available.

Broken Man 1999
Barclays sent me a letter telling me they had closed my card for inactivity. Whatever, I only used it for the $500 bonus years ago and then downgraded to the no fee version. Stinks to lose the credit limit and history but I’m okay without the risk of an unmonitored line of credit.
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Re: Chase reducing credit card limits

Post by Nicolas »

I just got such a letter from Chase, telling me that due to my low usage my limit was reduced to $5K. I don’t even know what it was before. I never carry a balance on any of my cards. I only used it for Amazon and I never spend that much so really I don’t care.

A couple of years ago AmEx was pestering me to increase my limit on their card. I didn’t need it so I ignored them. Eventually they stopped.
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Re: Chase reducing credit card limits

Post by whereskyle »

Watty wrote: Sun May 31, 2020 11:59 am
runswithscissors wrote: Sun May 31, 2020 3:05 am The reduction is quite drastic... from nearly $40K to the low teens.
If you have multiple credit cards with Chase then that may be part of the reason they are reducing your credit limit.

I suspect what is happening is that they are starting to see people that had very high credit card limits that they never used that are now running the credit card up right before they declare bankruptcy or run into other financial trouble so they are trying to limit their exposure to one person.

It would be very rare for someone to actually need a $40K credit card limit, especially if you are not routinely using it a lot each month. It would likely take a pretty bad situation for you to run up $40K in debt on that card so they are taking a lot of risk when there is little chance that you would use that $40K in credit if you were not having big financial problems.

I don't remember the exact circumstances but I once had around four credit cards with a company, probably Chase, and I got a new one for the sign up bonus and a new rebate program that looked good. As I recall I got the card but the credit limit was low so I called then to ask if they could increase it. It turned out that the reason it was low was that they were looking at all the credit cards I had with them combined and I was at the insanely high combined limit that they would give me. I was able to have them reduce the limit on a different credit card so they could increase the credit limit on my new credit card.

It was a lot lower but a week or so ago they also reduced the credit card limit on a airline credit card my wife has but I don't think she has ever had more than about a thousand dollar balance on it, which was paid off each month.
Good point. BoA lowered a limit on one of my cards shortly after I opened a new card with them.
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utvolfan
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Re: Chase reducing credit card limits

Post by utvolfan »

Got the same letter but for a different Chase card. Credit score in low 800's. Cut in half from mid teens. Use it mainly for Amazon purchases and always pay it off. Haven't used it the past few months and it would not have been anywhere near my limit if I had. First time I've ever gotten a letter like that, but it makes me feel a little better that I am not alone.
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runswithscissors
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Re: Chase reducing credit card limits

Post by runswithscissors »

Well I'm glad I'm not alone. I actually double checked and found out my credit limit was lower for my Freedom card; it was cut exactly 50%. I have another Chase card that has a higher limit. I am assuming that one will get slashed too. It's interesting because I didn't have any cards affected in the last credit crisis and my overall limits haven't changed much since then.

I've read that the ideal credit utilization is only 6% and if you go higher than that there is a negative impact to your score. I use a credit monitoring service and whenever my aggregate CL use exceeds about 15% I notice a drop in my credit score from around 840 to 815 but it always bounces back up. One time I made a few very large purchases at once while renovating my home and I was around 25-30% utilization. My score briefly hit 800. So credit utilization seems to have a fairly significant impact to my score. I guess the worst case if more banks cut my lines is that my credit score peaks and troughs will be further apart as I charge my cards and pay them off monthly.
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Cheez-It Guy
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Re: Chase reducing credit card limits

Post by Cheez-It Guy »

runswithscissors wrote: Sun May 31, 2020 10:09 pm Well I'm glad I'm not alone. I actually double checked and found out my credit limit was lower for my Freedom card; it was cut exactly 50%. I have another Chase card that has a higher limit. I am assuming that one will get slashed too. It's interesting because I didn't have any cards affected in the last credit crisis and my overall limits haven't changed much since then.

I've read that the ideal credit utilization is only 6% and if you go higher than that there is a negative impact to your score. I use a credit monitoring service and whenever my aggregate CL use exceeds about 15% I notice a drop in my credit score from around 840 to 815 but it always bounces back up. One time I made a few very large purchases at once while renovating my home and I was around 25-30% utilization. My score briefly hit 800. So credit utilization seems to have a fairly significant impact to my score. I guess the worst case if more banks cut my lines is that my credit score peaks and troughs will be further apart as I charge my cards and pay them off monthly.
How did you check / confirm this? Do you mean you checked whether you received a letter, or the credit limit change is already visible on the website?
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Re: Chase reducing credit card limits

Post by srt7 »

I hope they reduce the credit limit on my Freedom card. It's around $80,000. I've been meaning to call them about it for almost a year now :P
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Re: Chase reducing credit card limits

Post by anoop »

srt7 wrote: Sun May 31, 2020 10:19 pm I hope they reduce the credit limit on my Freedom card. It's around $80,000. I've been meaning to call them about it for almost a year now :P
Log in to their website and reduce the income that you report by 80%. It will happen without you making a call.
srt7
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Re: Chase reducing credit card limits

Post by srt7 »

anoop wrote: Sun May 31, 2020 10:23 pm
srt7 wrote: Sun May 31, 2020 10:19 pm I hope they reduce the credit limit on my Freedom card. It's around $80,000. I've been meaning to call them about it for almost a year now :P
Log in to their website and reduce the income that you report by 80%. It will happen without you making a call.
Good idea! Thanks.
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anoop
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Re: Chase reducing credit card limits

Post by anoop »

srt7 wrote: Sun May 31, 2020 10:25 pm
anoop wrote: Sun May 31, 2020 10:23 pm
srt7 wrote: Sun May 31, 2020 10:19 pm I hope they reduce the credit limit on my Freedom card. It's around $80,000. I've been meaning to call them about it for almost a year now :P
Log in to their website and reduce the income that you report by 80%. It will happen without you making a call.
Good idea! Thanks.
I underreport and I never get credit increases even though my utilization is high. I also don't get offers/scams from their marketing dept.

My credit keeps getting dinged and then recovering. But I don't care.
Dominic
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Re: Chase reducing credit card limits

Post by Dominic »

tibbitts wrote: Sun May 31, 2020 10:32 am I haven't been notified but most of my limits are in the low four-figure range already.
Same here.

I keep a cash emergency fund. Cash stinks, but I'd much rather avoid the risk of paying credit card interest, or worse, having my limits cut right when I need credit.
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runswithscissors
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Re: Chase reducing credit card limits

Post by runswithscissors »

Cheez-It Guy wrote: Sun May 31, 2020 10:16 pm
runswithscissors wrote: Sun May 31, 2020 10:09 pm Well I'm glad I'm not alone. I actually double checked and found out my credit limit was lower for my Freedom card; it was cut exactly 50%. I have another Chase card that has a higher limit. I am assuming that one will get slashed too. It's interesting because I didn't have any cards affected in the last credit crisis and my overall limits haven't changed much since then.

I've read that the ideal credit utilization is only 6% and if you go higher than that there is a negative impact to your score. I use a credit monitoring service and whenever my aggregate CL use exceeds about 15% I notice a drop in my credit score from around 840 to 815 but it always bounces back up. One time I made a few very large purchases at once while renovating my home and I was around 25-30% utilization. My score briefly hit 800. So credit utilization seems to have a fairly significant impact to my score. I guess the worst case if more banks cut my lines is that my credit score peaks and troughs will be further apart as I charge my cards and pay them off monthly.
How did you check / confirm this? Do you mean you checked whether you received a letter, or the credit limit change is already visible on the website?
I checked the limit on my Freedom card and realized I confused the limit on my Freedom and Sapphire cards. The letter does not specify what my original CL is, only what it will change to in 30 days. Received no letter reducing the CL on my Sapphire card but I don't spend anywhere near my CL on that card either (maybe 10% max over the last several years). I'm guessing that one will get cut in half too.
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Re: Chase reducing credit card limits

Post by theplayer11 »

srt7 wrote: Sun May 31, 2020 10:19 pm I hope they reduce the credit limit on my Freedom card. It's around $80,000. I've been meaning to call them about it for almost a year now :P
secure message on chase website and it's down in a few hours
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Re: Chase reducing credit card limits

Post by oldcomputerguy »

runswithscissors wrote: Sun May 31, 2020 3:05 am I have a Chase Freedom card and recently received a letter from Chase that states I have spent far below my available credit limit over the last 12 months and as a result will see a reduction to my limit by over 50% in 30 days. The reduction is quite drastic... from nearly $40K to the low teens. This will reduce my total aggregate credit card limit by over 15%. My score has remained in the low 800's for years and I have never received a credit card limit reduction in my life; I assume this is related to the pandemic.

Has anyone else received letters that their limits will be reduced?
It quite possibly has nothing to do with the pandemic. It's not unusual for credit card companies to reduce credit limit on cards that are infrequently used. I have a Capital One card that I seldom use (only for international travel). Based on that infrequent usage, Capital One reduced the credit limit on my card from $30,000 to $10,000. This was in March of 2018, long before the current coronavirus issues.

There's a discussion in a previous thread about similar reductions done by American Express, see American Express lowered my credit limit
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MikeG62
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Re: Chase reducing credit card limits

Post by MikeG62 »

I have three Chase CC's (CSR, Freedom and United Explorer). No letter received from Chase yet and no changes online to my available credit for any of these three cards as of this morning. All credit limits are fairly high (honestly much higher than they need to be). Nonetheless, I'd rather they not reduce my credit limits simply because I'd rather not experience a decline (even if temporary) to my FICO score.

I have a CC with Discover Bank - my oldest CC (dates back to the 1980's) with a $50K credit limit. I use the card infrequently, and even when they are running a 5% promo category spend, the card almost never gets more than hundreds of dollars charged in one month. In other months, the only charge is for iCloud storage (at $0.99 per month x 2 - one for me and one for my DW). I have thought about calling them and asking that they reduce the credit limit by 80%. Again, have not done that simply because of the FICO score impact. Feel like what difference does it make to have the credit limit being so high. It's not like someone is going to run up a large amount of charges that I would be responsible for. Honestly, if Chase is not alone is dropping credit limits, I would not be surprised if Discover decided to reduce mine.
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SmileyFace
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Re: Chase reducing credit card limits

Post by SmileyFace »

Interesting. With SO many choices I would think Chase would fear losing customers to competitors for doing this.
I hold 3 Chase cards currently (limits of each is above $30,000) and haven't gotten such a letter yet. If I do - I will respond telling them I will consolidate everything to Citi Double Cash Back and open additional Citi, BoA, TD, Barclays and CapitalOne cards as backups if they don't want my business.
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Re: Chase reducing credit card limits

Post by jrbdmb »

vested1 wrote: Sun May 31, 2020 5:17 am
UpperNwGuy wrote: Sun May 31, 2020 4:22 am Many lenders have been reducing credit card limits since the COVID-19 crisis began. They use a variety of algorithms to assess the risk of the credit cards they have issued. The letters they send out to the cardholders tend to be form letters citing one of several standard reasons, and the reason may seem arbitrary. The bottom line is that they want to get their own risk measures under better control as the nation's financial situation worsens. My advice: use all your cards regularly but never carryover an unpaid balance. Try to find that sweet spot between high utilization and excessively low utilization.
When we moved last year our credit dove by over 200 points to the low 600's. We had two hard inquiries, one without our knowledge, because we were shopping for a new car, and ran up our Chase card to 50% of the limit during the drive across country. We paid off the card before the due date, as we do every month.

The explanation for the credit hit was the two inquiries and the high utilization for two weeks during a billing cycle. Our score just jumped back up to the high 800's after a year at a lower level. We've always paid that main card off every month and never carry a balance on any card. Our score now says we at 10% utilization, and if Chase tries to lower our limit I'll start using a different one.

My suggestion would be to keep utilization of any card under 20%, even if not carrying a balance and to utilize multiple cards, zeroing them out every month. In my opinion credit agencies have too much power, and make the wrong assumptions about credit worthiness by putting everyone in the same box. Paying off your bills in full every month should automatically give you the highest rating IMHO, but I guess that's not how they see it.
I would agree that is crazy! Last year I pushed my utilization for one card to around 75% when I paid a tuition bill for my child and did not bother paying the card off early. I haven't kept a history of my score, but I think it dropped 50 points or so, and it recovered almost back to its original score the next month after I paid off the balance. I don't understand why 1 month of higher utilization would cause your score to drop for a year.
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Re: Chase reducing credit card limits

Post by cherijoh »

runswithscissors wrote: Sun May 31, 2020 3:05 am I have a Chase Freedom card and recently received a letter from Chase that states I have spent far below my available credit limit over the last 12 months and as a result will see a reduction to my limit by over 50% in 30 days. The reduction is quite drastic... from nearly $40K to the low teens. This will reduce my total aggregate credit card limit by over 15%. My score has remained in the low 800's for years and I have never received a credit card limit reduction in my life; I assume this is related to the pandemic.

Has anyone else received letters that their limits will be reduced?
Funny you should ask - I just got a letter from Chase today saying they were lowering mine by exactly 50%. My original limit was below $20K to start with. I haven't checked what % of my total credit limit that works out to be. However, since I rarely charge more than my monthly gym membership and a few annual recurring charges to my Chase card, I am not in the least surprised.

I'm also retired and not planning to borrow any money in the future, so I'm not terrible concerned with my credit rating taking a small ding if it does.
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Re: Chase reducing credit card limits

Post by cherijoh »

Info_Hound wrote: Sun May 31, 2020 10:23 am I recently received a similar letter from Chase. I never carry a balance on any credit card, ever. Credit score in the high 800s.

Recently I purchased replacement windows for the whole house and used the Chase card. The cash back feature helped to pay for a couple of the smaller windows. I assumed Chase had figured out that they were paying me (over years) to hold their card as I had paid no interest to them. While disappointing, I have other cards with a higher limit and will use them instead when needed.

My thought was what does the Chase action do to my credit score since it was my oldest card and with a high limit?
I'm pretty sure age of card is a totally separate metric than credit utilization. (IOW, I don't think it is a dollar-weighted average age of credit). So closing the card is the only thing that would effect your average age of credit.
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Re: Chase reducing credit card limits

Post by cherijoh »

texas lawdog wrote: Sun May 31, 2020 2:52 pm I received a similar letter from Chase the other day saying they were going to lower my limit on my SWA cc - was somewhat surprised as I do use this card each month for a minor subscription charge (Netflix) to keep credit fresh.

Don't really need the extra credit but enjoy having plenty of available and have a very high credit score (840), so I'm puzzled about why they suddenly made the change. Might leave a negative review the next time I'm asked to review one of their products, as this is not really a positive customer experience between Chase and me and would warn others before selecting them for credit.
If you aren't using the credit, IMO giving them a low customer experience rating for this seems rather petty. I leave low ratings for when I actually had a bad customer experience with a less than compentent CSR. :annoyed You appear to be taking it personally when it is anything BUT personal. A computer algorithm made the decision.

The bank gets dinged from a risk perspective for their entire credit exposure across all customers and all products. Mortgages and auto loans are a known quantity - the risk exposure is the current balance of the mortgage or car loan. If the bank decides they need to reduce their credit exposure, that leaves credit cards and HELOCs on the consumer side. If you want to reduce risk and maintain profits, it makes far more sense to reduce limits for customers who don't use their credit card (or the bulk of their assigned credit limit) than dinging the customer who actually pulls their company's credit card out first. In bank parlance that's called "top of wallet".

An individual's credit-worthiness is reflected in the interest rate they are charged for maintaining a balance. Although you need to keep in mind that rewards cards (especially those without annual fees) generally carry a higher interest rate than non-reward cards for customers in the same credit score range.
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Re: Chase reducing credit card limits

Post by Broken Man 1999 »

cherijoh wrote: Mon Jun 01, 2020 2:20 pm
texas lawdog wrote: Sun May 31, 2020 2:52 pm I received a similar letter from Chase the other day saying they were going to lower my limit on my SWA cc - was somewhat surprised as I do use this card each month for a minor subscription charge (Netflix) to keep credit fresh.

Don't really need the extra credit but enjoy having plenty of available and have a very high credit score (840), so I'm puzzled about why they suddenly made the change. Might leave a negative review the next time I'm asked to review one of their products, as this is not really a positive customer experience between Chase and me and would warn others before selecting them for credit.
If you aren't using the credit, IMO giving them a low customer experience rating for this seems rather petty. I leave low ratings for when I actually had a bad customer experience with a less than compentent CSR. :annoyed You appear to be taking it personally when it is anything BUT personal. A computer algorithm made the decision.

The bank gets dinged from a risk perspective for their entire credit exposure across all customers and all products. Mortgages and auto loans are a known quantity - the risk exposure is the current balance of the mortgage or car loan. If the bank decides they need to reduce their credit exposure, that leaves credit cards and HELOCs on the consumer side. If you want to reduce risk and maintain profits, it makes far more sense to reduce limits for customers who don't use their credit card (or the bulk of their assigned credit limit) than dinging the customer who actually pulls their company's credit card out first. In bank parlance that's called "top of wallet".

An individual's credit-worthiness is reflected in the interest rate they are charged for maintaining a balance. Although you need to keep in mind that rewards cards (especially those without annual fees) generally carry a higher interest rate than non-reward cards for customers in the same credit score range.
Well said. One should never overestimate their value to credit card issuers. Honestly, I am basically worthless to the providers of a couple or three credit cards. Still, my credit line hasn't been cut, YET, though I have little need for the line I already have. If I were receiving paper statements I would be costing them way more than they make on my line(s). At least I have only electronic statements, saving them a tiny bit. I wouldn't keep me as a customer if I were making a decision of what customers to lower their credit line or simply close their account(s).

I figure one day they will come to their senses and give me the old heave-ho. They really should.

Broken Man 1999
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Re: Chase reducing credit card limits

Post by Mudpuppy »

I haven't received any notices yet, but this thread did prompt me to go into all my credit cards and note their current credit limits, just to keep an eye on everything.
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