Chase Cuts Limits on Credit Cards by As Much As 50%

Chase Cuts Limits on Credit Cards

Chase Cuts Limits on Credit Cards by As Much As 50%

I first wrote back in April about credit card issuers reducing credit card limits for new and existing customers. Synchrony, Discover and Chase were mentioned in the article. Now Chase seems to have ramped up the practice, with many reports of lowered credit limits in the last few days. Chase has sent out letters or emails to let cardholders know that their credit card limit has been reduced. Some people might also just see a reduction in credit limit, but haven’t received an official notification yet.

Reduced Credit Limits

Chase is reducing credit limits for some customers, sometimes even as high as 50%. Letters that have been sent out state that the cardholders has spent far below the available credit limit over the last 12 months and as a result will see a reduction to the limit by a certain percentage in 30 days.

Here are some examples of these reports here and here. A reader also sent me an email saying that here credit limit was cut down by 50%, from $30K to $15K, and she has a credit score of ~800.

Reason for Reduced Limits

The pandemic and its financial impact are likely the main reason for these reductions. Millions of Americans have been taking advantage of the relief programs offered by credit card issuers, such as no interest or deferred payments for a few months. With many people unemployed right now, credit cards are a lifeline to continue making essential purchases, when there is no other income or savings.

The higher the limits on the affected card, the bigger the exposure is for the banks. Bank try to limit their credit risk. If people run up their credit card balances to the limit and then default on their debts and file for bankruptcy, banks are out of luck. In the case of a Chapter 7 bankruptcy for example, credit card companies are prevented from taking any further collection action.

Lower Limit Might Affect Your Score

When it comes to calculating your credit scores, credit utilization is one of the most important factors. That is the ratio of your outstanding credit card balances to your credit card limits. If your balance is $300 for example and your credit limit is $1,000, then your credit utilization is 30%. Anything under 30% is okay, but something closer to 1% is perfect. So if credit cards issuers are lowering credit limits, that will increase your credit utilization if you are carrying a balance.

Check If Your Credit Limits Were Decreased

Let me know if you were sent a notice from Chase about a decrease in your credit limit for a credit card. The decrease seems to have been a percentage of the total, and 50% is the highest I have seen reported, which is pretty drastic.

If you’re not sure what your credit limit was before, you can check previous statement credits in your account and compare to your current limit.

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3 thoughts on “Chase Cuts Limits on Credit Cards by As Much As 50%

  1. Received my letter today. Cut 40%! Sad that they do this to people have been with them 25+ years and who have 839 credit score and PIF every month. We are the ones they should continue business with. We use less than 1% of our total credit each month. I don’t particularly care about the card, but I do care about our credit score! I hope this does not affect lower our credit scores. Makes no sense that they go after cardholders that keep their agreement and pay their bills!

  2. I got a notice today that Chase was cutting my credit limit from $13,000 to $6500, due to “spending far below my available credit”. This is my secondary card, so I don’t use it on a regular basis or for large purchases, but I Do use it monthly to keep it active and generally charge $200-300 a month, some of that for monthly subscriptions. Balance paid in full every month via autopay. I have had this card for 29 years, and my credit score, according to Chase’s own “check your score” is 840. Have NEVER had a late payment or even carried a balance. I could understand it if I regularly had high balances or a lower credit score or anything in my profile that would show potential risk of running up my credit and then declaring bankruptcy. I signed into my account and saw 3 messages or “alerts” I hadn’t seen. I clicked them on, and all three were messages offering me more credit offers or platinum cards from Chase. Bizarre. This won’t affect me as far as ever needing to use that credit limit, but it will “ding” me slightly on my credit rating as far as utilization rate. My primary card is Capital One. We’ve had that one for 20:years. Use it for everything and pay balance every month. Our limit on that one is $33,000. We need that limit because we travel (before Covid) and spend heavily at times on NFL tickets. Again, balance always paid in full. Please help me understand this. As a matter of principle, it bothers me.

  3. Now I know why I don’t have any CHASE cards!!! What a crappy way to treat your customers. Go CITI and AX. My wife and I gave 8 accounts between them. Never a CLD. Are you listening CHASE.? Probably not because you only care about your private clients!

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