Released: August 26, 2008
Consumer Action poll: Cardholders see credit limits drop
Almost 18% have had credit limit lowered
Contact: .(JavaScript must be enabled to view this email address), 301-718-2511 orKen McEldowney, 415-777-9648
Aug. 27, 2008—If you are planning to use your credit card to make a big purchase, you may want to check your card’s line of credit before you pull out the plastic. Consumer Action conducted an online poll that asked if respondents had ever experienced a reduction in their credit card limits that they had not asked for. Almost 18% of the 1,083 consumers who participated in Consumer Action’s Credit Limit Survey said their credit limits had been lowered by the banks. Close to half (9.2%) said they’d seen their credit lines drop this year. Consumer Action conducted the poll between June 23 and July 15, 2008. The poll results are published in the Summer 2008 issue of Consumer Action News, the organization’s newsletter. Click here to go to view the newsletter online. Credit card companies regularly review the credit scores of account holders to determine whether or not they might become poor financial risks. Consumers may see their credit limits reduced if issuers believe they may not pay their debts. During Consumer Action’s 2008 Credit Card Survey, customer service representatives at six financial institutions (American Express, First Command, HSBC, US Bank, Washington Mutual and Wells Fargo) told CA surveyors that they would reduce cardholder’s credit limits because of perceived customer risk. Factors included a decline in cardholder credit scores, late payments and balances that go too close to the credit limit. Several of the banks that said they would not reduce credit limits reported just the opposite in 2007. They are Bank of America, Chase, Citi, Discover, and EverBank. With the possible exception of Citi, which made a pledge not to change cardholder terms until their cards have expired, Consumer Action believes it is unlikely that these banks have changed their policies.