Consumers are intended to be protected better with the credit card rules being put into place 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. Many of the time when the economy is down so far, credit limits are cut like this. But cardholders’ credit scores get hurt by it, through no fault of their own. But there are steps credit card users can take if they want to preserve their current credit limits, or even boost their credit limits.
Everyone is having a credit card limit dropped
During the recession, most credit card companies have been harder on their consumers. Credit card-issuing banks are trying to get as little risk as possible before new credit card rules come into play. There are many people getting their good credit scores hurt because of slashed credit card limits, reports Bankrate.com. Banks are trying to close as credit lines as they can, explained Dennis C. Moroney, research director of bank cards at TowerGroup, to Bankrate. Many people are having a difficult time borrowing money, even those with high credit score between 720 and 750.
Credit limits and credit scores move together
Credit limit hurt for 60 million cardholders in just the few years past. ”Risk trigger” are what they call things like regular late payments or high credit card balances, which Credit Card Guide explains some of these people having their limits cut haven’t even done. Credit limit cuts aren’t just a major inconvenience. For cardholders with outstanding balances they can hurt credit scores as well. With the debt-to-credit ratio weighing in second among the most important factors contributing to credit scores, credit line cuts are no small concern.
How to protect your credit card limits
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. Once a year most credit card accounts can get a credit limit increase. Always pay down the balance in full each month. And use the credit card a lot, but don’t exceed 50 percent of the credit line. Always send in the payment on time. Don’t cancel any credit cards, don’t apply for any new credit cards and never ask a credit card company to pull your credit report. A credit check is just as bad as applying for a new card.
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/
