Capital One Is Cutting Credit Limits for Many Cardholders
We have seen a trend of credit card issuers cutting limits for cardholders in recent months. The latest bank to do so is Capital. The decision comes as the bank tries to limit its exposure as the U.S. reduces support for millions of unemployed Americans.
Some customers have complained in recent days their limits have been slashed by as much as 75%. To makes matters worse, the lower credit limits make it more difficult to borrow in an emergency during a pandemic. Such drastic drops in limits also affect cardholders’ credit scores.
“Capital One periodically reviews accounts based on a variety of factors and may make changes to existing credit lines,” the company said in a statement to Bloomberg. It is not clear how many people are affected.
Capital One is the third-largest U.S. credit card lender. At first it targeted riskier customers with lower credit scores, but in recent years Capital One has released some premium cards.
These cuts seem to be all across the board, so if you have any Capital One cards, check your accounts so you know what your limit is at least and it doesn’t come as a surprise down the road. Here’s some instances of people reporting big cuts in Capital One credit limits:
CAPital one is cutting your credit limit on all your credit cards. So be aware. Even if your credit is A1. And this affects your credit score by overall spending limits (percentages)
They just cut down my limit by 3/4. They must be prepping for massive debt in 2021. 😔
— BEN BALLER™ (@BENBALLER) August 26, 2020
I have two different Capital one cards and and 850+ credit score and they cut my limit in half on both. Not an issue as I pay them off every month.
— Greg Wilson (@invadvice) August 28, 2020
Let me know if you were affected by this.
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 available credit. 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 Capital One cuts your credit limit, that will increase your credit utilization if you are carrying a balance.