Roughly 70 Million Cardholders Had Credit Limits Cut or Accounts Closed

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Roughly 70 Million Cardholders Had Credit Limits Cut or Accounts Closed

Credit card issuers have been cutting credit limits for new and current cardholders in recent months. They have even started closing unused credit cards, more than usual, during the pandemic. But a new survey shows that the numbers are drastic. Roughly a third of U.S. credit card users, about 70 million people, have had their credit limits reduced or accounts closed involuntarily since mid-May, Lending Tree’s Compare Cards website says.

The survey found that nearly 1 in 3 cardholders (34%) said they had their credit limit reduced on at least one card in the past 60 days. Most credit limits were reduced by $1,000 or less, but more than 1 in 5 limits (22%) were reduced by at least $5,000.

The survey also found that 1 in 4 cardholders (25%) said they had at least one credit card closed by their card issuer in the past 60 days.

Nearly 9 in 10 cardholders (89%) who had their credit limits reduced said their card issuer notified them of the move. But almost 1 in 6 (15%) of those said no reason was given. The most common reasons given for the reduced credit limits or account closures, were credit score decreases, inactivity and missed payments. The survey found that millennials are most likely to have had credit limits slashed and cards closed.

Card issuers are cutting credit limits to avoid potential losses from cardholders who could struggle to make payments during the pandemic. “That means that more cardholders should expect to have their credit card’s limit slashed or to have dormant accounts closed involuntarily,” LendingTree analyst Matt Schulz said in his analysis of the survey.

DDG
Based in NYC. Points/miles enthusiast for years and actively writing about it for the last two years at Danny the Deal Guru. I'm always looking out for deals. Making a few bucks is always nice, but the traveling is by far the best part of this business.

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6 COMMENTS

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6 COMMENTS

  1. This will really raise your credit utilization which will lower your credit score. Then they’ll lower your credit amount even more because your score went down. Then your credit amount gets cut again. Then with that lower score they’ll lower your credit availability again.

  2. Not sure why this matters. I typically get a $25,000-$35,000 credit limit when I open a card. I have 6 cards plus an Amex Platinum w total credit of over $160,000. So what if $10,000-$20,000 is taken off – I run $10,000-$15,000 a month on average and pay it all off every month. No big deal

  3. Waa recently approved for the CSP and was asked if I had additional income to report…Have never been asked that. But when I did get the approval they did take some of the credit limits from my other 4 cards. Basically so that all my credit limits combined is half of my total income.

    • You’re at what’s known as “Maximum Exposure” with Chase. A common situation for many years.

      Everyone who opens enough Chase CC’s will eventually get there, congratulations.

      This is nothing to worry about as it’s not related to the subject of this report.

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