Credit card companies now lowering limits
Posted on October 5, 2007
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Do you know your credit limit? When it comes to credit cards, you are probably used to it going up and up. The credit card industry is known for automatically increasing spending caps.
But have you looked at your statement lately? Some companies are now lowering credit limits. Some say the practice is good for consumers, but others say it could put you at risk.
In a recent Consumer Action survey, 75% of the banks questioned said they lower credit limits as a way to manage risk. The banking industry says it’s to protect consumers. “It also helps consumers to avoid becoming over extended with debt that they can’t manage or repay,” said Nessa Feddis with the American Bankers Association.
The change can stem from late payments of any kind, a drop in your credit score, or the addition of new lines of credit.
Consumer advocates say credit card companies must notify you by mail if your credit limit is changed. So, be aware not to throw away letters from your credit card company that may look like junk. Also, make sure to check your credit card statements online regularly to keep an eye on your available credit.