Credit Card Companies Slash Limits

Credit card companies are notorious for raising limits, which can be dangerous for consumers trying to pay down debts. These days, though, the poor economy is scaring some credit card companies into cutting limits, according to a report by Smart Money.

That wouldn’t be such a big deal, but companies aren’t legally required to immediately notify cardholders of the change. Worse yet, some companies are cutting limits below the amount of debt people have on the card, which is not currently against the law. A new law that states that cardholders must be given 45 days before penalties are triggered won’t go into effect until 2o1o, so cardholders could face thousands of dollars that they need to pay off immediately. Even 45 days isn’t a very long time, when you take into account that some people are facing $10,000 or more in limit slashes.

Congress is currently looking into these kinds of credit card issues, and hopefully new laws will be put into effect so that consumers are better protected and have options. Most companies aren’t cutting limits below people’s balances, but many are cutting to within $100 of their current debt. Consumers need to be aware that this is happening, and check their limits and balances regularly.

Image via SqueakyMarmot.