A final round of new credit card rules intended to protect consumers goes into effect on Aug. 22. Many of the credit card companies and banks are cutting credit limits, fees and rates on their credit in order to help bring these new laws into place. Slashing credit card limits is a common practice during economic hard times. Credit scores are hurt for any person who has this limit changed. You will find opportunities for people who want to either stop their credit limit from going down or even make it go up.
Credit card limits slashed across the board
During the recession, most credit card companies have been harder on their consumers. Many credit card-issuing banks are trying to rein in risk amid rising delinquencies and charge-offs — and before the final round of new credit card rules goes into effect. According to Bankrate.com, even those with good credit scores are having difficulties with dropping credit card limits. Banks are trying to close as many credit lines as they can, explained Dennis C. Moroney, research director of bank cards at TowerGroup, to Bankrate. He said that even people with higher scores that are cut down from 750 to 720 are having trouble getting credit.
Credit limit cuts hurt credit scores
Credit limit hurt for 60 million cardholders in just the few years past. Credit Card Guide reports that many people hit by credit limit cuts have not committed any of the typical “risk triggers” banks use to assess credit worthiness, like regular late payments or high credit card balances. Having your credit limit cut isn’t just an inconvenience for people. For cardholders with outstanding balances they can hurt credit scores as well. Credit line cuts aren’t just a concern considering one of one of the most significant things in a credit score is debt-to-credit ratios.
How to protect your credit card limits
For cardholders who want to keep their current credit limit and maybe even get a credit line increase, Eva Norlyk Smith at Credit Card Guide offers tips. First of all, simply call and ask. A credit limit increase is accessible to most credit card accounts at least once a year. Every month, make paying down the balances a priority. You should be using your credit card a lot, although you shouldn’t use more than 50 percent of the line of credit. Pay balances on time. Don’t ask credit card companies to pull your credit report, don’t get any new credit cards, and don’t cancel any cards. A credit check hurts a credit score as much as applying for a new credit card.
Additional reading
Bankrate
bankrate.com/finance/credit-cards/credit-card-issuers-slash-credit-limits-1.aspx
Credit Card guide
creditcardguide.com/creditcards/credit-card-tips/higher-credit-limit-6-dos-donts-342/
