The Credit Card Accountability Responsibility and Disclosure Act of 2009 sought to root out hidden fees, minimize unfair rate hikes and simplify credit card billing statements. However, the Credit CARD Act does not require that you receive notification if your credit limit is lowered by your bank. Creditors must report to Congress the number of reduced credit limits during the three years since the act was signed into law. That report goes to lawmakers, however, not to the owner of the card.
Changes to your credit limit are immediate and require no notification. Any confusion may stem from the 45-day advance notice required for any changes to your annual percentage rate, or APR. In addition, the Credit CARD Act requires that banks bill 21 days in advance, not the 14 days previously required. As a result, your credit limit change may go unnoticed until you receive your statement, log on to your account or receive a decline on your credit card.
The only time a bank must notify you of a change to your credit line is if the credit limit reduction causes your account balance to go over your new credit limit. In this case, the bank must send you a letter notifying you of the limit change. Additionally, the Credit CARD Act requires that you opt-in for over-limit fees. If your credit limit is reduced to the amount of debt that you hold with the bank, you are charged a monthly over-limit fee only if two things occur: You agree to the fee and the bank approves the over-the-limit credit for the transaction. If you don't agree, the charge will be declined by your bank.
A high amount of revolving debt, a lowered credit score or late payments may trigger a reduction to your credit limit. However, banks lower credit limits for a variety of reasons, not all of them having to you with you as an individual consumer. In some cases, banks simply seek to reduce their exposure on credit lines, causing an across-the-board reduction.
Querying Your Bank
If you discover your credit limit has been lowered, and you believe the reduction is unfair, contact your bank. Discuss your payment history and how long you've held the account. Review your overall credit score as well to determine if your full credit limit can be reinstated. If your appeal isn't successful, try again in a few months. Alternately, if you have the ability to transfer your account or pay off your balance, threaten to close your account. Banks want to keep their good customers, so may listen only if you threaten to take your business elsewhere.
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