Credit card companies are cutting people's limits below their outstanding balances without notificat

[Christa]

Credit card companies are cutting people's limits below their outstanding balances without notification

If you haven't had the credit limit cut on your credit card recently, count yourself lucky. Risk-averse card issuers are getting slash happy. And while many cardholders gripe that such cuts slice razor-close to their balance amounts, for an unfortunate few the cuts go far deeper: below what they currently owe.

Under different circumstances, David Chaplin-Loebell wouldn't have minded that American Express cut his unlimited credit line to just $5,000. Except that when AmEx reduced his line in October, he had an outstanding balance of $10,000. "I found out by having a business purchase declined," he says. Repeated calls to AmEx failed to yield an answer about why the cut was made. Chaplin-Loebell, who lives in Philadelphia, is now paying the balance under his regular card terms, and presumes the line will free up for new purchases once he's below the limit. "For now, they've essentially frozen the account," he says, leaving him to juggle business expenses on his personal cards. American Express did not respond to requests for comment.

Full article:

http://finance.yahoo.com/banking-budgeting/article/106716/How-to-Blow-Your-Credit-Limit-Without-Spending

[BlooInBloo]

1. Just saw that on yahoo.

[BuyingThyme]

2. The card companies are out of cash.

This is one of the ways they're found to raise cash.

[EFerrari]

5. Are they? Or are they being used as an atm by their parent companies?

I don't do finance very easily but, it would seem to be a natural. :shrug:

[hedgehog]

3. I think I know how CitiBank is planning on continuing profitability

My minimum payment tripled since last month even though my balance dropped!

[Tarheel_Dem]

21. I keep hearing these horror stories from other Citi cardholders, but to

my surprise, when I received my Feb statement, my line of credit had been increased by $3100. I didn't request it, and never thought it would happen in this climate. The bank where I keep my checking & savings accounts, sent me a new check card last week, because of some "breach" in security at a Heartland processing center. I don't trust the card companies, because I don't feel in control, anymore.

[masuki bance]

4. Can't win

First they get jumped for giving everybody credit and causing them to get into debt, now they get blamed for cutting back.

[hedgehog]

6. There's a difference between not sending out hundreds of pre-approved offers

(I used to get one or two a day!) and cutting back on an existing line of credit or cutting the line of credit below what is already owed.

[Christa]

8. This is not the same

from the article:

Paul Pensabene of Saratoga Springs, N.Y., received a statement from HSBC on Dec. 8 that said he had a $359.99 balance and remaining available credit of $8,640. But when he went online to pay the bill several days later, his online account showed that same balance put him over his newly-reduced credit line of $300. And that didn't include the $35 over-limit fee. Pensabene grappled with customer service until they agreed to remove the fee, and then paid the balance in full. "All I could think was, 'Good lord, what if this is happening to someone that couldn't pay their balance off in one shot?'" he says. "They'd end up in default with these fees piling up."

[Sebastian Doyle]

14. HSBC are some of the most vile bastards on the planet

Used to have a card with them. Not by choice - they bought out the bank that issued it originally. Their customer service was so absolutely shitty (and I had other cards) that I dropped the card. At the time I closed the account there was one charge on it, a quarterly auto-payment to XM radio. I included that payment with the notice to close the account and it was sent well in advance of the due date, thus leaving a zero balance.

Fucking assholes claimed the payment was "late". So they tried to charge me a $39 "late fee" on a zero balance. Then they added interest to their made up charges. Then they added another late fee to that, and went on like this for about 6 months, eventually working up to about $300 of purely fictional charges. Naturally they attempted telephone harassment through out this process as well. That didn't last long because the VOIP phone company I had suddenly collapsed, and they were left without a way to stalk me. But not before I told them to go Cheney themselves and that I didn't owe them shit.

[haele]

25. Problem is, they'll attach that zombie to your credit -

Of course, if you're like me, it won't matter, my credit's always being screwed up by medical expenses as it is.

Haele

[Donnachaidh]

12. oh my heart bleeds purple panther piss for the poor POOR credit card companies

:sarcasm:

[Gormy Cuss]

19. Whaddaya mean, "can't win?" They win every time. n/t

[Ichingcarpenter]

7. It cuts into the bonuses the bankers get... there's only so much money

going around.

[The_Casual_Observer]

9. It's going to put them out of business eventually. People will get used

to doing without them. The sooner the better.

[BlooInBloo]

10. NO BAILOUT MONEY FOR ANY WHO DON'T LEND TO CONSUMERS...

If you're not doing what the nature of your business is, then fucking go outta business.

[davidwparker]

11. My AMEX card is the last card that I have a balance. When it is paid, the

account will be closed. They can rebuild their business without me. I had about 8K of credit dropped to just above my balance.

When I do make purchases, for the necessities and to support local businesses/services, it is either case or my bank card which gets paid off each month. (The way it should be.)

This will be my way of life for the rest of my life.

[LuckyLib]

13. We have no balances on our credit cards, and use them for mileage.

If they mess with the rewards system one iota, we are done. Finished. They can have their damned cards and to hell with what it does to our credit rating number -- these SOBs have had far too much influence in our lives for far too long.

[dysfunctional press]

24. we're doing a re-fi to get rid of all the card debt that crept up on us...

and we'll be saving $400/month on the mortgage alone- plus no more card payments either.
amex is the only one we'll keep- because it's tied in with our costco membership.

[Naturyl]

15. Solution: Avoid credit cards.

Credit card companies are inherently predatory and will almost always find a way to take you to the cleaners, unless you are rich enough to pay off the full balance every month.

Credit cards are not necessary. They add nothing to life except the ability to obtain instant gratification at a very high long-term cost.

[yurbud]

16. another reason bankers should be in prison or used as shark or alligator bait

[Rob H.]

17. Another trick I've heard of them pulling recently:

I was watching a news story a few weeks ago and they talked to a woman who'd been making more than her minimum payment. She wasn't doing it every month but she did it as often as she could afford to, and the credit card company somehow rejiggered her account to make her new minimum payment match her previous overpayment amount. Fucking vampires--they pull bullshit moves like that to keep people in debt to them forever and then wonder why people hate them!

[hedgehog]

23. Hokey smokes - that's exactly what happened to me! I put in a larger than

normal payment after getting my income tax refund and that's what they want next month, too!

[indepat]

18. With the green light and a license from Congress to racketeer, fuck-wads will do what fuck-wads do

best: rip off and racketeer. :P

[surrealAmerican]

20. If ever there was an industry calling out for effective regulation ...

... this is it. We desperately need federal regulation of credit cards. They will suck every last dollar out of this economy if we don't stop them.

[tgnyc]

22. I hate these fuckers.

[alstephenson]

26. Most people don't know that federal regulators adopted sweeping credit card reforms last December...

But they don't take effect until July 1, 2010! These rules should be implemented IMMEDIATELY!

*What's happening: On Dec. 18, 2008, federal regulators adopted the most sweeping set of credit card rule reforms in decades.
*Why it's important: The regulations will tilt the playing field toward consumers by removing some of the credit card industry's most profitable and punitive practices. Consumer advocates favor it, card issuers warn it will drive up the price of and limit the availability of credit cards.
*What's next: Card issuers have until July 1, 2010, to implement the new rules.

http://www.creditcards.com/credit-card-news/what-the-new-credit-card-rules-mean-1282.php