Why did my credit card limit decrease?

Your credit card limit could have been decreased for several reasons, such as missing payments (including on a different card or loan) or changes in income. This could lead the issuer to assess that the risk of you missing payments in the future has increased.

Here are some possible reasons why your credit card limit decreased:

• Missed payments: If the lender detects a number of missed or late payments, they could assume that you might be experiencing financial difficulties.
• Reduced income: If your income was lost or you received a pay cut, your credit limit could be decreased to fall in line with your current income levels.
• Credit utilization: The percentage of your available credit that you use each month is called credit utilization. It is indicative of your ability to handle additional spending power. So, exhausting your allotment of credit could also lead to a credit limit decrease. The same could happen for not using your credit card much or at all over a certain amount of time.
• Issuer is reducing credit risk: Credit card issuers reduce credit limits collectively when the economy is uncertain, in an attempt to reduce credit risk.

Ultimately, it is worth noting that credit card limit decreases can often happen without notification. Therefore, it is always a good idea to check out for credit limit changes, so you don’t accidentally go over your credit line.

Hi! How upsetting – you are doing your best to do everything right but it seems as if you are being punished for your diligence. I want to commend you on paying down your card balances – that is exactly the right thing to do, and you want to continue doing so. What’s happening in the credit card limit reduction is something called “chasing the balance,” and it is legal for credit card companies to do it without your permission or necessarily your knowledge ahead of time. This Cardhub article explains chasing the balance as “gradually reducing one’s credit limit as he or she pays off amounts owed so as to prevent them from racking up new charges that they can’t afford to pay back.” Banks don’t have to let you know about this action beforehand. And it may not even be personal to you because sometimes credit limit decreases are applied a defined segment of cardholders as a result of economic factors.

So to answer your question, there probably is nothing you can do right now but keep paying off your cards and paying minimums on time. Don’t rashly cancel the card, but you can try and request an additional card if you want to keep your available credit at the same level. Other actions you might take are to make sure that the monthly minimum hasn’t changed, actually read the correspondence the credit card company sends in case there’s an error, and call the company to ask why your limit has been reduced and when it might go up.

Hopefully your credit limits will return to normal soon. Best wishes and thanks for writing!