Surprise! Your credit limit is only half of what you thought it was!

Factual Questions
#1

So last night, my wife took me out on the town in a limo. During the night, we found that our credit card was being declined. This morning, the limo company called, upset that our card wasn’t going through.

Now, we only use one credit card, one that goes through our bank. We’ve had it for years, and it’s got a nice, comfortable credit limit… one that we pay off every month.

After a bit of research this morning, it appears that our credit limit has been dropped to about half of what it was just last month. We had no warning- no call, and we haven’t gotten our monthly mailed statement. And, of course, the department that could TELL us why the limit was dropped isn’t, you know, open today.

Also the limo charge was suspected of being fraudulent, but we’ve gotten that cleared up, at least. Bonus points to the limo guy, who first accused us of trying to scam him, and then (when we told him that the bank thought it was fraudulent) said, “Oh, yeah, that happens a lot.” Jerk.

So, has anyone heard of this happening? If we’d done this last month, we wouldn’t have had any problems- but this month, since they suddenly dropped our credit limit, suddenly we’ve got charges being returned and we, well, look like assholes.

#2

You might have a credit hold placed by a merchant on your card. If you order something on line, then cancel, especially if you re-order, sometimes they mess up and put two holds on your account, that can reduce credit limit if it was a big ticket item.

#3

Yeah, that was our first thought. However, the only charge that could’ve caused that was the limo service- and they didn’t try to use the card 'til this morning. Card services didn’t say anything about holding charges, anyway- just that our credit line had been reduced (although they couldn’t tell us WHY, of course).

As an aside, I hate how those holding charges don’t show up on the online statement, but instead just show up as a temporary reduction in available credit.

#4

It goes through your bank, and I’ve seen banks change stuff without warnings. They may have instituted a limit decrease on a number of cards at once as a broad policy change. Only your bank can say for sure why they changed it.

#5

See Your Good Credit Is Under Attack- Granted the article is by a company selling credit monitoring services, but the description of the games the CC companies are playing is is accurate.

#6

Cripes. Am I glad I’m operating on a cash-only basis. Granted, that was forced upon me, and I can’t get credit, but still…

#7

I had an unexplained credit drop happen to me by American Express. I have always paid my card on time, and once while on vacation I found out I did not have the credit I expected. About a week later I got a letter saying that they decreased my limit, with no explanation. I have just stopped using that card. The funny thing is I get dozens of letters trying to get me to subscribe to new credit cards full of glowing recommendations for their products, and then they wreck years of advertising with a clumsy reduction in my line of credit.

#8

Figured out what happened. My credit limit was slashed in half thanks to the Short Sale I’m going through on my house. Very annoying- I pay my credit card off every month with no problem, have plenty of money in the bank, and have no other outstanding credit problems… but because the housing market collapsed and I can’t sell my house, I’m a credit risk. sigh

The really annoying thing, though, is that they said they mailed me a notice about it last week. Of course, I didn’t receive that letter. They said they don’t call about it, because they’re afraid people will run up their cards if they get any advance warning that their limit is being dropped- after all, it’s much better if consumers suddenly find that their card is useless. Glad it didn’t happen while I was on vacation.

#9

I had Amex do this to me once as well, decrasing the limit by 400 dollars for no apparent reason, and then a few months later for no apparent reason increased it by 5K.

#10

That must have been a real bummer. I guess the banks frown upon merrymaking from people who can’t meet their mortgage obligations? :confused:

#11

There’s a whole lot of assumption in that sentence, there. You might want to look up “short sale”.

As I said, it’s not the slashing of my credit limit that I mind. It’s the complete and total lack of any warning whatsoever that I find rather rude.

#12

This is my problem with Amex as well. They advertise “no pre-set spending limit”, but fail to tell you that they arbitrarily impose one without telling you.

#13

AmEx did the same thing to us. They dropped our limit to less than the amount owed on the card, then raised our intrest rate for being over limit!

#14

Yowza. My only problem with credit limits is that they are insanely high. I had to address that specifically the last time I got a mortgage (possibly too much available credit).

Sucks that you didn’t receive the letter, though- maybe you chucked it by mistake because it looked useless?

#15

Possible, but unlikely. My wife is an accountant, and goes over everything from the bank with a fine-tooth comb.

#16

:eek: Evil.

#17

I thought a high credit limit was good, since your ratio of credt used to credt available is high, showing that you have the self-restraint not to spend all the credit you can get.

And I’ve always wondered about those AmEx ads: “No pre-set spending limit.” Doesn’t that just mean I won’t know my spending limit? How is that a good thing?

#18

My understanding is that you should have about be 30% of your credit limit in debt. The problem is, if you have $45000 in credit available to you and you’ve only used $3000 of it, and you only make $60,000 per year. A new lender looks at that sees that you have the potential to dig yourself really deep really fast and not pay them back.

ETA about a year ago, I noticed that my Chase Mastercard had gone from a normal APR to the default APR of 29.99%. When I called and asked then why they told me that according to my credit report I had just received a credit card with a $20,000 limit and it was already maxed out at 20K and therefore I’m now a high risk. Luckily, it was becuase I just bought a house and that was a secured line of credit against the house. That could be seen partially because both the LOC and the mortgage had been taken out at the same time and from the same bank. Even more lukily they beleived me, put my APR back where it was and refunded me and extra interest I paid.

#19

Holy cow. I mean, lowering the limit I can see, but charging you fees until you pay it below the limit? It’s hard to believe that’s even legal.

#20

Do you mean “no more than 30%” or that you should be 30% in debt? I’m 0% in debt, and intend to stay that way, and haven’t had any problems or lowered credit limits.