A final round of new credit card rules designed to protect consumers goes into effect on Aug. 22. To make these new rules possible, banks and credit card companies are working to cut credit limits, rates and fees on all their cards. Slashing credit card limits is a common practice during economic hard times. Even though a consumer can do nothing about it, having a credit limit lowered like this hurts a person’s credit score. There are choices 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
Credit card companies are cracking down on cardholders during the recession and its aftermath. Before new credit card rules have to be upheld, banks who use credit cards are trying to pull in all of their risk. Bankrate.com reports that even cardholders with good credit scores are getting their credit card limits slashed. Research director of bank cards at TowerGroup, Dennis C. Moroney, explained to Bankrate that credit lines are being closed up at numerous banks. Numerous individuals are having a difficult time borrowing money, even those with high credit score between 720 and 750.
Credit limits make credit scores drop
More than 60 million cardholders have had their credit limit slashed over the past few years. According to Credit Card Guide, quite a couple of of these people having their credit limits cut down have not done anything like regular late payment or high credit card balances that are called “risk triggers”. Having your credit limit cut isn’t just an inconvenience for people. For cardholders with outstanding balances they can hurt credit scores also. With the debt-to-credit ratio weighing in second among probably the most significant factors contributing to credit scores, credit line cuts are no small concern.
Making certain your credit card limits are protected
Any person trying to keep their credit limits from going down or help their credit go up should listen to advice given at Credit Card Guide by Eva Norlyk Smith. You are able to always call and ask. Once a year most credit card accounts can get a credit limit increase. Each month, make paying off the balances a priority. You need to be using your credit card a lot, although you shouldn’t use more than 50 percent of the line of credit. Always send in the payment on time. Don’t cancel credit cards you already have, don’t get any new either, and don’t get a credit check through your credit card company. Applying for more credit and a credit check are two really bad things to do.
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/
