How to Cope With Sudden Changes in Credit Card Spending Limits

You may have enjoyed a nice relationship with your credit card over the last few years. You’ve taken it out to dinner on numerous occasions. It’s acted like a best friend and helped you out of a jam in emergency situations. You even went on vacation with it and enjoyed a nice, relaxing time sipping tropical drinks while watching the sun set. Then, out of the blue your credit card company sends you a letter telling you that your credit limit has been slashed. Where did it all go wrong?

Credit card companies are notorious for being fickle in a relationship and changing their minds. But it’s not without warning. When you apply for a credit card you are given notice that the company may invoke changes in the terms of your relationship at their discretion. Changes could include:

Lowering (or raising) your credit limit

Even if you have never exceeded your credit limit and made at least minimum monthly payments, your balance may be hovering too close to your limit for too long. In other instances you may have had a late payment on a different credit card, but a recent inquiry check on your credit score shows this derogatory payment and the resulting decision from another company is to lower your limit. In any case, a lowered credit limit affects your credit score. Thus steps should be taken to avoid this occurrence.

Increasing the interest rate – This is particular to making late payments. If you have been unfaithful with your credit card company and made even one late payment, you could end up with a notice of a higher interest rate. Be resolute about always making payments on time with your credit cards.

Like in any relationship you can work with your credit card company and hash out a resolution to sudden changes. Here are some tips:

Talk it out

Call or write to your credit card company. They will usually provide a reason for the credit term change in a letter to you. Ask to speak to a supervisor and note the positive relationship factors you have made to their company, such as on-time payments, and always staying within credit limits. They could revoke their decision based on your call, but the worst they can do is say no.

Pay your debt

If you have a large balance reaching near your limit, try paying it down, or paying it off entirely. If you show them you are wise to your balance they may make the change to raise your limit again.

If all else fails, walk

Sometimes even after talking with your credit card company and doing all they have asked, they will not make any favorable changes for you. In that case you may want to consider opening a new account with a different company that offers better terms. You may choose to keep your old card active and not use it, which could help your credit score, or close it entirely. In either case, make sure you pay off or transfer your balance to the new card.

Learn how to take control of your credit cards with our free personal finance calculators and loan comparison tools. Expand your knowledge by reading articles found at the personal finance budgeting portal www.moneyspud.com">www.MoneySpud.com.

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