Chase Cutting Credit Limits Pandemic
With the current uncertainty in the economy, it seems that banks are getting more aggressive about protecting themselves. We had heard anecdotally that banks were cutting credit limits for some, but it finally hit home. After seeing reports that Chase was cutting limits I logged into my account to see the carnage.
As a little background I have several Chase personal cards and several business cards with the bank. I have been a customer for a long time and my overall limits between personal and business are probably close to $100K and over that if you look at both my wife and I. They certainly have a decent amount of exposure with us, however we pay off our bills every month and haven’t engaged in any unusual spending on our cards during this crisis.
Chase Cut My Credit Limits on Some Cards!
Nonetheless they got me, but not terribly. Chase did cut the limits on some of our cards, but not by much. Interesting enough many of our cards with very high limits were left alone.
Here are some of my Chase cards including the before/after credit limit:
- Chase Sapphire Reserve – Credit limit was $10K, now it is $7,182.87
- Freedom Unlimited – Credit limit was $5K, now it is $2,880.10
- World of Hyatt – Credit limit was $24K, now it continues to be $24K
We also have a couple of other regular Freedom cards that are untouched and our Chase Ink cards seem to all have the same limits as before. In other words, a couple of our cards had modest cuts, but we still have plenty of credit from Chase and some cards like the World of Hyatt retained very large limits.
Why Do Banks Cut Credit Lines
The economy has suddenly turned from booming to uncertain and the banks are left somewhat exposed. Over the past decade the economy and specifically the rewards credit card markets have boomed, with banks fighting each other for customers. This has resulted in massive credit lines for consumers who may need to draw that money due to financial hardships.
Credit cards are also considered unsecured debt, meaning people who charge up their cards and later file bankruptcy can often pay nothing. To limit their exposure banks will check credit and use all of the latest info they have on a customer in order to determine how much credit they want to extend. Given the volatile nature of current events, banks are being conservative when giving out new credit and also when determining credit limits, etc.
One other thing to consider is spending. If you aren’t using a card don’t expect a bank to leave a large open credit limit. I do use both my Freedom Unlimited & Sapphire Reserve cards often, so I’m not sure what Chase saw in this case. It does seem my limits were reduced by a formula given the strange dollar amount of my new limits.
Chase Cutting Credit Limits Pandemic – Bottom Line
Chase and many other banks are taking a serious look at their relationship with customers. Until the economy stablizes and banks have a better idea of how they will come out of this, expect things like credit limit decreases and other tightening.
Did Chase or another bank recently cut your credit limit? Share your story in the comments!
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I was just notified that Chase reduced my credit line: chase freedom was reduced from $13,800 to $500 and chase sapphire from $9000 to $500. It was so convenient that this happened right after I paid off balances on both accounts. What a SERIOUS HIT to my credit score/credit utilization rate ! I had run up balances on a few of my other credit cards due to being out of work for a few months but I was NEVER late on my payments….
They exactly halved my main and now only remaining credit card.
I avoid credit whenever possible, but it has lowered my credit score by 1 point.
It’s still very high, so they can shove it, frankly.
Their old trick was to automatically raise limits so you couldn’t use your available credit limits with other card providers.
Looks like I get to take this opportunity to open up new lines of credit, eventually restoring my lost credit point/s and lock Chase out.
They offer nothing not easily obtained through other institutions.
Chase cut my freedom card limit in half (reduced by 10k) but I just noticed they have pre-approved me for a “sapphire preferred”. Other than suggesting they are doing this to collect an annual fee, can anyone explain this insanity?
Art, I wondered the same..
Chase’s old trick was to automatically raise limits so you weren’t able to shop around with other credit providers, but this is exactly what you now get to do.
Their lowering my limit has caused my credit score to drop by a gigantic 1 point.. Way less than if I’d lowered it myself or canceled the card altogether.
They have given me the opportunity to open another line of credit with another provider without any of the loss of credit score.
They’re someone I’ve been trying to get away from for years.. Suits me fine.
My credit score hasn’t changed yet, but I still object to the tactic. I was planning to cut my card usage even further, but then they had a 5% cash back at amazon — so I may wait until sept 30 to put that cc to bed! I don’t appreciate companies that cut you adrift at the first sign of (their) trouble — you’d think they want to keep their good customers.
I have a balance on my Chase card of 10k, my limit was 25k – they lowered my card to 11k limit and my credit score dropped by 30 points because it now looks like I am maxed out. I am beyond pissed.
Just got the notice re my chase freedom card that I’ve had for almost 3 decades … credit score is 824 . They lowered my limit by 50% ( from 20 to 10k) because I’m not charging enough ! I use the card occasionally, when one of the cashback categories is actually helpful … but I resent the cut, since spending might have increased after the pandemic subsided. I have other credit, but I really resent this action, since it may ding my excellent credit score simply because I’ve been responsible. I think that’s it for chase … I will use my other banks in the future for large purchases.
Chase is known to be both very conservative, (and quirky with credit limits). It’s no surprise that Chase would be the first bank to lower their risk with customers they see as risky. This Covid-19 thing will have an enormous negative financial impact on many US consumers, (but will have zero negative effect on the majority).
For anyone concerned and wanting to look non-risky, just maximize the credit utilization part of your credit score. The easy way to do this is to only allow ONE revolving credit card to close each billing cycle with a small balance. FWIW, the ideal for the utilization portion of your FICO score is $2, (unless you choose Discover then $3).
Chase doesn’t like high or growing utilization, (especially now).
Always remember, like most banks Chase “Soft-Pulls” every cardholder’s credit report monthly for account review, (this has been the case since well before this Covid-19 thing). So if Chase takes adverse action and lowers your credit limits, it won’t necessarily be due to your usage of your Chase CC accounts, (their algorithm will consider ALL of your open revolving accounts).
FWIW, Chase hasn’t lowered any of my limits as of yet, (and I know for a fact I’m at “Max-Exposure” with Chase).
I just checked, and Chase has actually increased the CL on both my Sapphire Reserve and Freedom Unlimited since the last time I looked.
First, the bad news: Chase lowered my World of Hyatt credit limit from 31K to 15K. Now, the good news: they lowered the limit because I applied for and received a Chase IHG Premier card with a limit of 16K, and apparently it was issued contrary to their 5/24 rule. Better yet, I just now qualified for 140K IHG bonus points for spending 3K.
Jeff you were over 5/24 when applying?
I have not had a single cl lowered not even one dime. I am as good as gold to Chase. Utlization near zero. High lines. High credit score. Very long track record.
Wow. Thanks for sharing.
Just wondering – do they give you a notification of the CL decrease? Or do you have to stumble upon this yourself?
They are required by Federal law to send you an “Adverse Action” letter, (probably within 30 days).
Mine said: in reviewing your account, we saw you spent far below your available credit limit in the last 12 months. Because of your limited usage, we’re lowering your limit to $10,100 30 days from the date of this letter. This still allows you to use the card as you have in the past. .. after this change takes effect, we won’t be able to increase your limit without reviewing your credit report. “ 30 year customer; 824 credit score, balance paid in full at the end of each billing cycle, if not before. Chase seems to be taking their loyal customers for granted … I was going to call to complain, but decided just to take the bulk of my business elsewhere. No point in rewarding them for bad behavior.
Same knee jerk reaction as back in 2008/2009. The companies are running soft hits to credit files, reviewing usage / payment history etc all tied to a credit profile program. As the virus mess continues I think you’ll see more of this. Also those algorithms the cc issuers are using will also include all those credit cards people have appleid for used for points then dumped face up to it those were bound to come back and bite people.
We’re all in it together…except that we’re not.
Shawn, sucks that it happened but at least it wasn’t too terrible. But a question, I see that they cut your CSR to under $10k…I was always under the impression that all Visa Infinite cards had to have a minimum of $10k.
I’m guessing there’s no truth to that?
Need 10K to open the card, not to keep the card.
As Bill said when you get the card the minimum is $10K, but it can apparently go lower if you shift credit or they lower your limit like in my case.
Chase typically looks at your credit in aggregate. Whether there was any logic to why one card was cut more than others or left alone, you would likely have success with asking to adjust your individual limits across your cards for your needs across the 3 cards, as long as the sum equals the new overall limit.
It’s true that Chase has an overall number they will extend, but it doesn’t explain how they are taking some off of one card and not off of another. I suspect this time they are looking at individual use of the cards as well as the aggregate. We aren’t in Kansas anymore. Good point about shifting credit to where you need it!