BILL'S ANSWER
The recent downturn in the American economy, which has placed financial strain on banks and other lending institutions, has resulted in many credit grantors trying to control their exposure to risk by cutting back on new lending and reducing or canceling the credit limits of existing customers on products such as credit cards and home equity loans. The New York Times ran a story in June, 2008, exploring the reasons behind these reductions; you can read this article by visiting nytimes.com.
I will try to answer your questions below to the best of my ability.
1) The amount of time before a change to the terms of your credit agreement must be sent depends on your agreement; I encourage you to obtain and review a copy. However, the credit limit provided to you is not a “term” of your agreement with the credit card lender, so no notice usually needs to be given for the creditor to change the credit limit. Generally, agreements state that the creditor will provide credit at an amount to be determined by the creditor. I would be very surprised if your agreement required the creditor to provide a set credit limit.
2) You can always sue the creditor; the question is, do you have a viable case? Given the information above, I believe the creditor has the right to change your credit limit at will. If the creditor will not willingly increase your credit limit to its previous amount, your legal recourse is probably quite limited.
3) See above
4) Credit scoring is much too complicated for me to tell you how one single action will affect your credit score, especially without knowing more details about your overall financial situation. For example, I do not know how much you owe on this and other debts, what your credit limits are, etc. Paying off the account would likely improve your credit score, but simply closing it may or may not help. To read more about credit scoring, I encourage you to visit the Bills.com Credit Resources page at /credit/.
5) Generally speaking, if a consumer closes a credit account with an outstanding balance the creditor will accelerate the debt and demand full payment within a very short time period (like 30 days). I would be very surprised if the creditor allowed you to continue making your minimum payments if you closed the account.
6) I really do not think that threatening to file for bankruptcy protection is the best way to convince this creditor to increase your credit limit. You may wish to explain your positive payment history, your length of time as a customer of the bank, your good credit score, etc. I would recommend focusing on positive aspects of your financial history rather than the possibility of future financial difficulties.
7) Again, I would recommend discussing the positive aspects of your past credit performance when requesting a lower APR for the same reasons as listed above. If a creditor thinks that you are on the brink of financial collapse, it may lower your credit limits and increase your interest rates even more due to the additional risk you pose to your lenders.
You should remember that the reductions in credit limits and other lending by many banks is a response to our countryÂ’s overall economic problems. They are making such changes on many customersÂ’ accounts as a matter of policy; this is not happening as a result of something you did. Unfortunately, there is probably not much you can do to correct the problem either. If you need credit, you may wish to consider opening new credit card accounts to replace the credit lines reduced by your current creditors. However, given the difficult economic times we are facing, you should be very carful about overextending yourself financially. I wish you the best of luck finding a solution to your problem, and hope that the information I have provided helps you Find. Learn. Save.
Best,
Bill
www.bills.com/
April 21, 2009
Since you don't have facebook, please provide us with your location and a valid email address so we can answer it. Without a valid email address,we can't reply. (Go back to login with Facebook)
Due to the high volume of comments received, we cannot publish and/or respond to every comment received. If you have a specific question, we recommend you search our site for an answer before commenting.
* Bills.com will not share, sell, lend, or make public your e-mail address. We reserve the right to delete any questions or comments that violate the Bills.com terms of service.
We get a lot of comments! To help us show our boss that this is a valuable service, so we can keep providing it, we ask you to do 2 things before commmenting:
Log in
Like us
Submit your comment!
Due to the high volume of comments received, we cannot publish and/or respond to every comment received. If you have a specific question, we recommend you search our site for an answer before commenting.
* Bills.com will not share, sell, lend, or make public your e-mail address. We reserve the right to delete any questions or comments that violate the Bills.com terms of service.
Thank you for your comment. Your comment will be posted shortly.
Comments (1)