It looks like banks are making another go at reducing credit limits. A few months ago we warned about precipitous reductions in credit limits on home equity loans and credit cards. SmartMoney.com is reporting that credit card issues are again getting “slash happy” on credit card limits. In some instances credit card issuers have reduced limits below what is actually owed by the cardholder. And the kicker, this is done without notice to the cardholder. This situation not only puts the consumer in a bind when new charges are unexpectedly declined, but also instantly makes the account over limit unbeknownst to the cardholder. As most know, being over limit can bring about higher interest rates and fees. According to this article people are getting hit with fees in this situation.
Credit card companies are within their rights to reduce credit limits without notice. They can also charge fees for being over limit. However, to reduce a credit limit without notice and then charge extra fees is reprehensible and not what I would consider dealing in good faith with its customers. If you have been hit by a fee for overcharging when you didn’t know or by being over limit when you had no chance to pay the account down, I would encourage you to contact the credit card issuer and request the fees be removed from your account.
If you have an experience with this situation, please share in the comments below.