Credit Card Credit Limit Lowered After Using Card

[Qs Laptop]

I have two credit cards I use, one for business purposes and one for personal uses. Chase Visa is my business card and has a $28,000 credit limit; Citi Visa is my personal card and had a $30,800 limit until recently.

Previously, I had used my Citi card as my business use card, but a couple of years ago I switched to using the Chase card as my business card. The Citi card became my personal card and was used for higher ticket purchases like appliances, stereo systems, a lawn mower, and vacations. I pay the balance off every month.

I got an email from Citi saying my credit limit had been adjusted so I logged into my account and took a look. It turns out there were two notices of credit limit adjustments, one last December lowering it from $30,800 to $21,000 and one from yesterday lowering it from $21,000 to $17,000.

This seems odd to me. Why would they lower my credit limit if I've been charging somewhat expensive things to it recently?

Besides my two Visa cards my wife uses a Discover card for typical things like groceries, gasoline, gym membership, restaurants, etc, and pays off the balance every month which is usually around $500. I think the credit limit on the Discover card is around $10,000.

I should mention household income has increased significantly in the past 3 years.

Any idea why Citi would lower my credit limit?

 

[Aspiration]

I can't speak to why they may have lowered your limit; however, since your income has increased significantly in the past three years, a simple phone call could get it increased higher than it was previously.

 

[COcheesehead]

Maybe they looked at your overall available credit, age or other factors and decided to reduce their risk.

 

[ShokWaveRider]

I think it is Citi. I have a Citi Costco and it seems like pulling teeth to get them to raise the limit to $20k. Conversely I have a Chase card that is $78k Go figure.

 

[MarieIG]

I suspect - but do not know - that this has nothing to do with your personal credit, but rather is part of an overall business model to reduce the lender's credit risk.

 

[Car-Guy]

^^^^
This - My guess too!

 

[OldShooter]

I suspect - but do not know - that this has nothing to do with your personal credit, but rather is part of an overall business model to reduce the lender's credit risk.

That would be my guess, too, but why not call and ask?

 

[Walt34]

I suspect - but do not know - that this has nothing to do with your personal credit, but rather is part of an overall business model to reduce the lender's credit risk.

I think so too. When I first got a Capital One cc the credit limit was enough to buy a nice new car, which I thought was absurd and must have been a mistake. A year or so later they lowered it to $10k, which is still plenty high enough for me since I don't envision the circumstances in which I'd ever have a five-figure cc bill. But in thinking about it, I suppose they have to set aside a certain amount of cash for bad loans, and the less credit they extend, the less their potential bad loans would be.

 

[Chuckanut]

They’re minimizing the risks of big losses, to just in case the economy goes downhill and people stop paying their CC bills.


Capital One reduced my limit by nearly 40% a few years ago supposedly because I was not charging enough. They have offered to raise it if I send them new income information. So far I have not. I buy most of my stuff on the Fidelity 2% card which is my go-to card for things thaty don't fall into special categories for a bigger cash back amount.

 

[nwsteve]

We have a Sapphire Reserve Acct at Chase and I get nag emails whenever my usuage exceeds about a third of my credit limit. We do this regularly when we have just bought Intl air and paid last deposit on a cruise in same billing cycle. Even though the account is marked auto pay and is paid in full each month Chase "dings" your credit score for a month. And then returns the score to its previous level the next billing cycle. Meanwhile our credit score on Citi card does not change at all. I have finally decided to ignore their nag mails and use the credit line as needed. Currently we are over half with new travel deposits and air .��*

 

[d.davis]

We locked down our credit in 2015 (coincidentally, when we er'd) after the OPM data give away since they gave up everything. A few years later Capital One reduced the credit limit on my two cards with them. I always assumed the credit reduction was because they no longer had access to our credit file from the big three so didn't know what kind of risk we present.

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[Chuckanut]

A few years later Capital One reduced the credit limit on my two cards with them. I always assumed the credit reduction was because they no longer had access to our credit file from the big three so didn't know what kind of risk we present.

If you have frozen your credit bureau accounts (which is different from locking) and already had credit with Cap One they still have access to your credit scores. Freezing ends the ability to get new credit without first thawing your account. Current CCs can still get your score, and they report your payment to the credit bureau also.

 

[PaunchyPirate]

Capital One just lowered the credit limit of one card (I have 2 with them) by $10,000. The reason they gave in a letter to me was that I was only using a small amount of the available credit. That’s was indeed true. I viewed it as part of their reducing their potential exposures and nothing to do with my credit situation. I have plenty of available credit between various cards, so I don’t worry about it.

 

[athena53]

Maybe they looked at your overall available credit, age or other factors and decided to reduce their risk.

I don't think they can take age into consideration.

I agree with those who suggested they may be trying to reduce their exposure to defaults. Wonder if Amex will knock mine down. Last year they gave me a $40,500 credit line, which is crazy (and I had Fidelity and Costco Visas as well).

 

[d.davis]

If you have frozen your credit bureau accounts (which is different from locking) and already had credit with Cap One they still have access to your credit scores. Freezing ends the ability to get new credit without first thawing your account. Current CCs can still get your score, and they report your payment to the credit bureau also.

It was a freeze. Thank you for the info.

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[Qs Laptop]

I received an email from a Capital One card that I no longer use. It says there has been a change to my credit score and to log in to see the new score. After logging in, I see that my credit score has dropped from 830 to 756!

I think I got an email from them several months ago saying if I did not use the card in the next 60 days it would expire. Well, I didn't use the Capital One card and I let it expire. Is that why my credit score has declined?

I haven't had a credit score below 800 for decades. What is going on here?

 

[pacergal]

You have less credit available, so the credit you do use is a higher percentage of what's available. so that would be my guess as to why your score went down.

 

[Jeffman52]

They are lowering their risk associated with having available credit available to be used.


I remember all (or most) the credit cards doing that in 2007 - 2010. I had a bunch of cards in those days and every time I paid a card down $1000 they lowered my limit that much. Just to rub salt in it all, that was back when it was pretty easy to get 4% - %6 cards, they wanted to change them all the variable rate with a higher rate on them. You could accept, or not. If you decided to not accept then they closed out your ability to charge, and when your card was paid off, the card was closed.


I remember being pretty steamed about it, but its not like you had a leg to stand on, they were doing it across the board.


Today I have one credit card that I pay off as I go. So I don't care what they do with the rates.