In an Amazon credit card forum, a customer posted about a dilemma: The poster uses an Amazon store card to finance book purchases for school, but when it came time to buy another semester’s worth of course materials, the consumer couldn’t complete the purchase. The card’s credit limit had been lowered to $1 less than the remaining balance, leaving no room for new charges.
“I looked at my statements and the credit limit has remained the same until now. I pay more than the min. payment each month so that I can pay it off,” the cardholder wrote. “I have never missed a payment, and I rarely make purchases. What is going on and why did they lower my credit limit? Is there something I can do to raise it again? I really need my books.”
The Amazon store card is a product of Synchrony Financial (formerly GE Capital Retail Bank), and a company spokeswoman said Synchrony couldn’t comment on the specific account activity without more customer details.
“Synchrony Financial does not apply an overcharge fee when a cardholder’s credit limit is lowered below the existing balance due,” the spokeswoman wrote in an email. “Cardholders with questions or concerns regarding their account are encouraged to contact us so we may provide assistance.”
It may seem unfair that a credit card company can lower your limit without warning, but it’s not illegal. Plenty of actions require 45 days’ advance notice, thanks to the Credit CARD Act, but changing a credit limit isn’t one of them. Such “significant changes,” as they are called in the Truth in Lending Act, include changes to your interest rate, fees or grace period.
If your limit is lowered below an existing balance, issuers are prohibited from charging an over-the-limit fee or penalty rate without giving 45 days’ notice before the limit is reduced. If that happens to you (as this customer alleges), you may want to contact an attorney or file a complaint with the Consumer Financial Protection Bureau, said Gerri Detweiler, Credit.com’s director of consumer education.
An issuer may decide to lower your credit limit for a variety of reasons.
“Credit limits are based on a number of factors and we periodically review our accounts, making adjustments to increase or decrease credit limits,” the Synchrony Financial spokeswoman said in an email.
With a lower limit, your credit score could go down if you don’t also reduce your spending, because the more you use of your available credit across all your credit cards, the lower your credit score will likely be — you can see how your credit-card spending affects your credit standing by checking your two free credit scores on Credit.com. You may want to contact your issuer to learn why your limit was lowered and if there’s anything you can do to increase it, Detweiler said.
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