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!