March 30, 2009
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News: Quick-change Credit Card Limits
Beware of the SBD limit reductions on your credit card. Often times, they show up by surprise. Penalties and punishments can be steep. With all the turmoil in the credit card industry, caught in the threat of two reform bills sliding through Congress and public opinion whippings that force titans like JPMorgan/Chase to rescind contrived fees, the industry is having to play their cards earlier in the game. When Chase tried to scare up some revenue this way, they were, additionally, forced to refund millions of their credit card accounts for back fees. Now, the industry is making good their threat of aggressively cutting credit limits.
If/when either of Senator Dodd's or Rep. Maloney's credit card reform bills clear Congress, the industry may find they have much less ‘wiggle room'. Even credit card holders with good credit ratings are being targeted. Over 20% of the credit card issuers have proven this. For those with lower credit scores, 60% of the banks have hammered them with lower limits.
JPMorgan/Chase has already removed the Limit Increase Request page from their Accounts Management/Products & Services menu. Now, a person must call Customer Service to make such a request and will likely be placed into the ‘pending queue'. That's usually not a good sign. Citigroup and AMEX are already reporting their worst credit card losses in 20 years.
Even though the Truth in Lending Law's Regulation does specify that a card holder be given a 15-day notice (raised to 45 days in Sen. Dodd's bill), sometimes consumers get no notice at all. So, before making any sizable purchases, it may save a lot of grief to routinely check your credit limit. Many times, people get no other notice. Cases where people don't read their credit card statements until the bill is due (which happens to be more than 15 days away) are common. People have reported the last page, with the warning, being missing from their bill but not missed because they didn't know how many pages to expect. Again, penalties are stiff for going over the limit. A little bit of prevention can go a long way.