Why NOW?

[Zippsgal]

Back in 2008 I remember when all of the credit card companies starting sending out their panic letters -

"We are reducing your available credit to ........_____......based on the following reasons......."

Why on earth am I getting one of these letters NOW - almost 4 years later ........ when I have paid DOWN my balance, on time, and with NO missed payments EVER? This hit me out of left field. I was so excited to be doing so well! The balance going down should get me an increase in my credit line - right? Last May my credit score was above 700 so it must have only gone up from there since then.

I am so frustrated about this.....

They (BANK OF AMERICA!!!) listed the following reasons:
- Number of accounts with a balance (I only have 2 accounts total with B of A and have reduced my total credit card count to less than half od what it was 4 years ago)

- Payment on one or more of your accounts with us was too low

Again, I have never missed a payment and always pay at least the minimum. Maybe because I have a low interest rate locked in? Maybe because I pay the minimum on their account (being that my interest rate is so low) while allocating higher payments and bonus payments to my other high interest accounts?

If anyone has any insight please let me know. Also if you have experienced this as well - did you do anything about it and if so - what did you do about it and what was your result?

Thank you so much.

[ThriftyMan]

zipsgal

Wow. I'm with you...I don't know why that would have happened. Under the CARD act, they shouldn't be able to do that unless you really did miss a payment amount. I'd call them immediately and dispute it.

Tell them you've been aggressively paying off debt and you'll pay off your account as soon as possible unless they roll it back.

Hope that helps. To me it sounds like there's been a mistake and you should be able to get it figured out with them.

[Zippsgal]

Wow. Unbelievable.

I just spoke with B of A and they stand by their decision!

They reviewed my account and agreed with everything I said but then put me on hold to "have someone else take a look at my account". The same guy then came back on and quoted that in my "terms of agreement they are allowed to reduce my line at any time." I quoted the CARD act regarding my payment history and lack of missed payments and he agreed that I am a stellar customer - which I have been since 1998. He stated that since 2008....blah...blah....blah.....and I asked him why they waited 4 years after 2008 to reduce my line when my income has substantially increased and I have paid off such a HUGE amount of debt since then ($50,000 I believe) with NO PRIOR HISTORY of problems with payments since I opened the line. He had nothing to say! Just kept saying sorry and that he understands.

He indicated that between my two accounts I still have a substantial amount of available credit and I informed him that the available credit was NOT my concern - but I am concerned that it will negatively impact my credit score since they are reducing it by such a substantial amount (for NO reason). He said that he was really sorry and there was nothing that he could do about it!!!!!! I was floored!

Any additional input or recommendations? I am so shocked by this!!!!!!!!!!!!

[ThriftyMan]

Wow. They said the decision was based on 2008? Crazy.

Sounds like they're reducing your total credit limits, but it's still above your current balances, correct? It may or may not impact your credit score. 30% of your score depends on utilization, but it really just depends on what your utilization will be after the reduction.

Here's how to check:

Add up all your credit limits and your balances and calculate your utilization percent. If you utilization is less than 10-15%, your score will be fine. If it's higher than that, it may be impacted. You can also calculate utilization based on your old credit limits and see the change.

If it's pretty high, you can do a couple of things.

• You could get another credit card somewhere and not use it--this will increase your available line and drop your utilization. Of course, now you will add an inquiry to your report and that will lower your score for about 6 months.
• You could just keep paying off debt. Since you're in debt paydown mode, you really don't need to worry too much about your aggregate lines unless it impacts your score so much that other card companies now raise your rates.

I always favor just paying it off and not worrying too much about your score.


If you want to send me an email with the details (your current score, and your old and new utlizations) I can help you think through it.


scott.crawford[@]savvymoney.com

[Zippsgal]

Hi Scott,

Thank you very much for all of the information and support.

Yes - available credit is still above my current balance but not by much. It went from $24,000 to $11,700 which is very close to my current balance after the adjustment. Another funny tidbit is that they keep sending me offers for balance transfers on another card that I have with them! Incredible!

I think I just wanted to get the word out and let people know that even though you are doing everything right and doing it well - you can still have something like this happen to you.

I did make an error above - I have paid off $30,000 as opposed to $50,000 of my debt.

Either way it isn't fair. I found DebtGoal (SavvyMoney) in May 2008 after reading Reader's Digest and have been a believer ever since. It has honestly helped me when I was going down a road of paying only monthly minimums but charging three times the monthly minimum! I have been thoroughly educated with your help and hope that my story can keep others informed.

I am indeed in debt pay-down mode and plan to remain that way for quite some time. My feelings were just very hurt and for a moment I felt very discouraged and as if I had to argue with them and prove something. I took it very personal - when it isn't personal at all!

Oh well. I have plenty of time and will never be in debt again!

[Monix]

When that happened to us, I closed all my accounts and continue to pay them off. One card that had a big balance, i switched to a personal loan with my credit union and closed it. I have yet to see any impact to my credit score. Perhaps because I am still paying them off, it has not hit yet? I'm not sure how that all works. I too was extremely disappointed with each of the cc companies I had done business with as I had been a customer for years. Never again. Best wishes for you.

[ThriftyMan]

Monix

When you open or close a credit card or personal installment loan, you're changing your credit utilization which is a measure of your outstanding debt relative to your credit lines. If you open a new one and close another, your balance and credit line don't change much and you're credit score won't be affected much.

But I love that you took out an installment loan to pay off credit card debt. We love this--you usually get a lower rate and you get a payment schedule that will pay off your debt in 3-5 years, depending on the term of the loan. It's a great way to add some discipline to your plan. We recommend that everyone consider this option.

Great work!