Credit Card Companies Reducing Limits Due To Uncertainty

Economic uncertainty is causing some credit card companies to keep a closer eye on your activity and even, in some cases, place restrictions on new and existing customers.

“Card companies have an awful lot of latitude when it comes to cutting your credit limits or possibly even canceling your card without warning,” says Ted Rossman with CreditCards.com. “It’s something that we’re starting to see with this pandemic.”

Companies have begun lowering limits to both new and existing cardholders, even those who are in good standing. That is why Rossman suggests keeping your credit cards active, in a sensible way.

“Cards that have not been used in a while are the most likely to be canceled without warning. If you want to keep cards active - and you should because it helps your credit score in most cases - then make a small charge and pay it off right away.”

If you are having trouble paying off your balance, card companies may be able to help.

“Card companies are being generous with hardship programs. You have to let them know though,” says Rossman. “You can often buy yourself some time, maybe even get a lower interest rate. What you don’t want to do is go delinquent and then have them chase you down.”

That’s why during these unprecedented times, Rossman says you may be able to ignore the traditional advice not to carry a balance from month to month. “Maybe when it comes to your stimulus payment, you may be better off using that for necessities or saving it than paying down card debt.”

He advises everyone to keep cash on hand and avoid using your card as your emergency fund if you can avoid it.