August 22 is when new credit card rules can be put into place. The majority of the credit card companies and banks are cutting credit limits, fees and rates on their credit in order to help bring these new laws into place. Slashing credit card limits is a common practice during economic hard times. Credit scores are hurt for any person who has this limit changed. To help your credit limit stay the very same or get higher, there are things you can do.
Dropping credit card limits
Consumers have had to deal more with the credit card company’s rules during the recession. 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. He said that even people with higher scores that are cut down from 750 to 720 are having trouble getting credit.
Credit limit cuts hurt credit scores
In just the last few years, over 60 million cardholders have had troubles with losing credit limits. “Risk trigger” are what they call things like regular late payments or high credit card balances, which Credit Card Guide explains some of these individuals having their limits cut have not even done. Having your credit limit cut is not just an inconvenience for people. It really hurts credit scores when a cardholder has an outstanding balance also. Credit line cuts aren’t just a concern considering one of probably the most significant things in a credit score is debt-to-credit ratios.
Making sure your credit card limits are protected
For cardholders who want to keep their current credit limit and perhaps even get a credit line increase, Eva Norlyk Smith at Credit Card Guide offers tips. Calling and asking is the first thing to do. Most credit card accounts are eligible for credit limit increases once a year. Your balances should be paid off each and every single month. You need to be using your credit card a lot, although you shouldn’t use more than 50 percent of the line of credit. Pay balances on time. Don’t ask credit card companies to pull your credit report, don’t get any new credit cards, and don’t cancel any cards. 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/