credit cards

Chasing the balance

Thursday, March 26
Posted 8 a.m.

Lately we've been hearing about card issuers "chasing down the balance" -- they lower your credit limit to your current balance or just above it. You pay it down and they lower your credit limit. And on and on.

We got an e-mail on Monday from Chris J. who told us his story:

Recently discussing a future family trip to Canada prompted us to pay down more of our credit card debt for the trip, (we needed) to allow for at least $8,000 on credit cards required for booking (the) flight, hotel, (and) rental van. Bank of America Visa jumped on the money by reducing our limit (to) near that amount. After (two) hours on the telephone wiggling my way to the actual credit decision person, she swore that had no bearing, (even though) I have good credit. She said they will continue to review credit due to the "challenging economic times," not necessarily the customer's history, although they promise to look at ... the big picture. I, of course, threatened to make minimum payments in the future and use my Capital One card instead -- (to) which one of the representatives (replied), "They are doing it too".

Yesterday we got an e-mail from Karen G. telling us her experience:

I have had a credit card account with HSBC for 3 years and have been on time with all payments (and) in fact, (I) have always made very large payments. For example, my minimum payment is $76 and I pay $500. They would raise my credit limit periodically. My credit limit started out at $2,100 and had gotten up to $4,200. My Feb. 10 statement had the $4,200 credit limit. I received an e-mail on Feb. 21, 2009, from Account Central (HBSC) that my credit card was within $100 of my credit limit. I thought it was a mistake. My balance was $214.65. I went to the Web site and it showed my last statement credit limit of $4,200. I clicked on account information and it showed a credit limit of $420. I did not receive any notification by mail until March 7, telling me they reduced my credit limit. This is just a little bit extreme, don't you think? From $4,200 to $420?

We do think it's extreme. So that's Bank of America, Capital One and HSBC. A colleague told me her husband's business American Express credit limit had also been chased down over the past few months.

Reporter Leslie McFadden is writing a story on all of this (stay tuned), and one of the situations she's trying to clarify right now is whether a cardholder will be charged an over-limit fee if their credit line is reduced below the balance. Or if, like Karen, you're unaware that your limit has been cut and you go over the limit? Has this happened to you? If so, please let us know the circumstances.

So what can you do to protect yourself? Pay close attention to your statements and check your credit limit, your balance and any fees that may have been charged. If your credit card issuer allows you to set alerts when you get close to your limit, be sure to set it. Or call your issuer every day and ask what your credit line is … Imagine if everyone called their issuer every day and asked for their credit limit …?

Comments? Questions? E-mail Plastic_Rap@Bankrate.com.

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