Credit Limits May Decrease Following Subprime Credit Crunch
Wednesday August 29, 2007
The ripples from the subprime mortgage fiasco have not stopped spreading. Credit card delinquencies are rising and credit card issuers are taking action to protect themselves.
In CNN Money, Curtis Arnold of CardRatings warns that creditors may start increasing fees for balance transfers, increasing introductory interest rates, and lowering credit limits for cardholders, even those with good credit. The article warns cardholders to pay attention to their credit card statements and read inserts for notifications of changes.
There's a possibility that your credit score can drop if your credit limit decreases, especially if you don't see it coming. Your credit utilization will increase if you're carrying a balance on the credit card. Also, if you're operating under the assumption that you have a higher credit limit than you actually do, you could end up going over your limit by mistake, triggering over-the-limit fees and possibly penalty interest rates.
If you're on the market for a balance transfer credit card, now might not be the best time. Make sure you shop around and choose the balance transfer card with the best terms. Continue making timely payments on the balance you intend to transfer until you have successfully transferred the balance to the new credit card.
In CNN Money, Curtis Arnold of CardRatings warns that creditors may start increasing fees for balance transfers, increasing introductory interest rates, and lowering credit limits for cardholders, even those with good credit. The article warns cardholders to pay attention to their credit card statements and read inserts for notifications of changes.
There's a possibility that your credit score can drop if your credit limit decreases, especially if you don't see it coming. Your credit utilization will increase if you're carrying a balance on the credit card. Also, if you're operating under the assumption that you have a higher credit limit than you actually do, you could end up going over your limit by mistake, triggering over-the-limit fees and possibly penalty interest rates.
If you're on the market for a balance transfer credit card, now might not be the best time. Make sure you shop around and choose the balance transfer card with the best terms. Continue making timely payments on the balance you intend to transfer until you have successfully transferred the balance to the new credit card.
Comments
Washington Mutual dropped my credit card limit from $3,500 to $316. Their reason for doing so was because my account is currently deliquent. I missed my payment by one day and was also given a refund for the late fee because my account is in good standing. Wow!
aspirecard dropped my limit by 60% and i have never been late.
Chase lowered my credit limit because I use my card! I have never been late and I pay double the amount due each month! I have nothing negative on my credit report and now what will happen to my credit score??? This is infuriating.