Responding to a Credit Limit Cut

I was taught that it wasn't good manners to take back something after you'd already given it to someone. Apparently, the people running the big credit card companies weren't taught the same thing. Credit limit cuts are yet another nasty side effect of the credit crisis. American Express customers report having their credit limits cut by thousands of dollars.

It's bad enough having your credit taken away. It's worse that credit limit cuts can severely damage your credit score. Remember that credit utilization - your credit card balances compared to your credit limit - counts for 30% of your credit score. Well, a decreased credit limit increases your credit utilization, making it look like you maxed out your card when you really didn't. As a result, your credit score could suffer. Closing your credit card isn't smart, unless you want to hurt your credit score even more. Find out How to Respond to Credit Limit Cuts.