Home > Credit Cards > How Can A Credit Card Company Lower My Limit if I’m Paying on Time?

Comments 2 Comments

Q. Can a credit card issuer reduce your credit limit or available credit that you can borrow? I have a Synchrony Card, and I have used their 12-month, interest-free promotion for three years. Suddenly, my available credit was reduced by 50%. Is that possible? I make my payments on time and paid the balance before the promo ended. — Nestor

A. Let’s start by addressing this question broadly: While the CARD Act prohibits issuers from changing certain credit card terms, like your annual percentage rates, without at least 45 days notice, issuers can change credit limits at any time. It’s usually if a person’s payment behavior changes or there’s a major change to their general profile.

See, many issuers conduct account reviews from time to time, and often these reviews involve a credit pull. (Don’t worry, that credit pull shouldn’t affect your credit — since you’re not requesting financing, it’ll be considered a soft inquiry.) Now the results of that credit pull could wind up working out in your favor: If your score has improved, you may be awarded a higher credit limit, or even a special offer to sign up for a more premium piece of plastic.

But sometimes it can work against you: If your score has gone down, your credit limit may get slashed.

“Most issuers review their customer’s credit at least monthly and adjust credit limits if there is a significant change,” said Eric Lindeen, vice president of marketing for ID Analytics in San Diego, California, which offers fraud prevention tools and credit risk management scores to issuers. “Limit increases require confirmation of ability to pay, which is why they keep asking for your income. Many factors can be considered when lowering the credit limit, including late payments or even high-risk product choices.”

Sometimes, too, issuers are responding to regulatory pressure.

“Issuers may even reduce limits in response to a regulator’s concern that they are overexposed to potential credit losses,” Lindeen said in an email. “Since consumers with lower credit ratings represent a higher risk to the institution, those would be the consumers most likely to see their limit reduced.”

In other words, it’s totally possible for a credit limit to get slashed on a card in good standing due to other negative information on your credit reports, like high balances or missed payments on another card, for example.

Now, we can’t confirm whether a credit score drop is behind the credit limit decrease you say you’ve experienced specifically, since, of course, we don’t know your credit score. (You can see where your credit stands by viewing two of your scores for free, updated each month, on Credit.com.) We reached out to your issuer, Synchrony Financial, and they were able to confirm that, while certain credit card terms, like your payment due date, don’t change due to your credit scores, “credit lines are set/approved/adjusted based on multiple factors, including credit score, use of account and repayment history.”

The spokesperson didn’t immediately respond to a request for comment on how Synchrony may notify a cardholder that their limit has changed. But, in any event, it’s a good idea to call them up and ask about your alleged credit limit decrease.

“We encourage an accountholder to contact us directly with any questions or concerns about their account,” the spokesperson wrote. “This gives us an opportunity to research their specific inquiry.”

That’s actually a good rule of thumb for anyone who encounters a similar problem: If the terms on your credit card account change, you can always call your issuer to find out the specific reason. And, if you’re unhappy with the modifications, you can ask them to reconsider. Just be aware that this request might result in a hard inquiry on your credit report, which can ding your credit scores, since they may want to look at your credit again before making a final decision — and this time, you’re asking.

Image: BraunS

Comments on articles and responses to those comments are not provided or commissioned by a bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by a bank advertiser. It is not a bank advertiser's responsibility to ensure all posts and/or questions are answered.

Please note that our comments are moderated, so it may take a little time before you see them on the page. Thanks for your patience.

  • Reighn9

    Sometimes these companies will not give an explanation when they change your terms & conditions. Some claim they do not have a credit analyst. Many customer service representatives refuse to transfer you to a supervisor saying “he won’t tell you anything different than I can”. I have also had so-called supervisors correct a credit line decrease, then when the increase didn’t show up I called back and was told “she didn’t have the authority to do that”. Makes you wonder who you can believe or trust. That has happened to me more than once. Here some examples of terms changes I’ve had with little to no explanation: GE Money (now Synchrony Bank) when they first bought up all their companies that belonged to someone else-walmart, penneys, chevron, mccoys, sams club-just to name a few, they dropped all my credit limits by 50%-75% or more on accounts in good standing to that point. The decrease put several of my accounts over limit, and when I couldn’t pay them down fast enough the account was closed for being over limit. I’ve had American Express change my terms & conditions at least twice with little comprehensive explantion-I just have the traditional green card. It had no pre-set spending limit and I had a pay over time feature on purchases over $100. I received a letter canceling the pay over time feature and requesting payment immediately. The feature was returned in 12 months. Now this past November I got hit from several companies-American Express again this time decided to set a spending limit of 1500 on the card. This card does not carry a balance. Target, as they were changing from VISA to MasterCard, dropped my limt from $5000 to $3500 and took away cash availability, did not send a letter of explanation or any notification. One company reduced my available credit to $0 and my ability to use the card when I disputed the credit limit reported on my credit report. Another lowered my limit by $300 and that’s all they said about. Customer service doesn’t have access to any of this information. I do have high balances. The only advice I get from anyone is check your credit report and your payments aren’t high enough. I know what’s in my reports and what is a high enough payment? Many creditors don’t report the actual payment.

  • Angie

    It seems that synchrony bank has done this to many. I had a Jcpenny card and a Walmart card cancelled that did not have a balance on them and a Home Depot and amazon card reduced… all from sychnory. Even though I am never late.

Certain credit cards and other financial products mentioned in this and other articles on Credit.com News & Advice may also be offered through Credit.com product pages, and Credit.com will be compensated if our users apply for and ultimately sign up for any of these cards or products. However, this relationship does not result in any preferential editorial treatment.

Hello, Reader!

Thanks for checking out Credit.com. We hope you find the site and the journalism we produce useful. We wanted to take some time to tell you a bit about ourselves.

Our People

The Credit.com editorial team is staffed by a team of editors and reporters, each with many years of financial reporting experience. We’ve worked for places like the New York Times, American Banker, Frontline, TheStreet.com, Business Insider, ABC News, NBC News, CNBC and many others. We also employ a few freelancers and more than 50 contributors (these are typically subject matter experts from the worlds of finance, academia, politics, business and elsewhere).

Our Reporting

We take great pains to ensure that the articles, video and graphics you see on Credit.com are thoroughly reported and fact-checked. Each story is read by two separate editors, and we adhere to the highest editorial standards. We’re not perfect, however, and if you see something that you think is wrong, please email us at editorial team [at] credit [dot] com,

The Credit.com editorial team is committed to providing our readers and viewers with sound, well-reported and understandable information designed to inform and empower. We won’t tell you what to do. We will, however, do our best to explain the consequences of various actions, thereby arming you with the information you need to make decisions that are in your best interests. We also write about things relating to money and finance we think are interesting and want to share.

In addition to appearing on Credit.com, our articles are syndicated to dozens of other news sites. We have more than 100 partners, including MSN, ABC News, CBS News, Yahoo, Marketwatch, Scripps, Money Magazine and many others. This network operates similarly to the Associated Press or Reuters, except we focus almost exclusively on issues relating to personal finance. These are not advertorial or paid placements, rather we provide these articles to our partners in most cases for free. These relationships create more awareness of Credit.com in general and they result in more traffic to us as well.

Our Business Model

Credit.com’s journalism is largely supported by an e-commerce business model. Rather than rely on revenue from display ad impressions, Credit.com maintains a financial marketplace separate from its editorial pages. When someone navigates to those pages, and applies for a credit card, for example, Credit.com will get paid what is essentially a finder’s fee if that person ends up getting the card. That doesn’t mean, however, that our editorial decisions are informed by the products available in our marketplace. The editorial team chooses what to write about and how to write about it independently of the decisions and priorities of the business side of the company. In fact, we maintain a strict and important firewall between the editorial and business departments. Our mission as journalists is to serve the reader, not the advertiser. In that sense, we are no different from any other news organization that is supported by ad revenue.

Visitors to Credit.com are also able to register for a free Credit.com account, which gives them access to a tool called The Credit Report Card. This tool provides users with two free credit scores and a breakdown of the information in their Experian credit report, updated twice monthly. Again, this tool is entirely free, and we mention that frequently in our articles, because we think that it’s a good thing for users to have access to data like this. Separate from its educational value, there is also a business angle to the Credit Report Card. Registered users can be matched with products and services for which they are most likely to qualify. In other words, if you register and you find that your credit is less than stellar, Credit.com won’t recommend a high-end platinum credit card that requires an excellent credit score You’d likely get rejected, and that’s no good for you or Credit.com. You’d be no closer to getting a product you need, there’d be a wasted inquiry on your credit report, and Credit.com wouldn’t get paid. These are essentially what are commonly referred to as "targeted ads" in the world of the Internet. Despite all of this, however, even if you never apply for any product, the Credit Report Card will remain free, and none of this will impact how the editorial team reports on credit and credit scores.

Our Owners

Credit.com is owned by Progrexion Holdings Inc. which is the owner and administrator of a number of business related to credit and credit repair, including CreditRepair.com, and eFolks. In addition, Progrexion also provides services to Lexington Law Firm as a third party provider. Despite being owned by Progrexion, it is not the role of the Credit.com editorial team to advocate the use of the company’s other services. In articles, reporters may mention credit repair as an option, for example, but we’ll also be sure to note the various alternatives to that service. Furthermore, you may see ads for credit repair services on Credit.com, but the editorial team isn’t responsible for the creation or implementation of those ads, anymore than reporters for the New York Times or Washington Post are responsible for the ads on their sites.

Your Stories

Lastly, much of what we do is informed by our own experiences as well as the experiences of our readers. We want to tell your stories if you’re interested in sharing them. Please email us at story ideas [at] credit [dot] com with ideas or visit us on Facebook or Twitter.

Thanks for stopping by.

- The Credit.com Editorial Team