Defending Access To Your Credit Cards & Lines

Credit card issuers are panicking, cutting credit lines and entire cards. This can have a negative impact on your credit score, here’s a few ideas on how to defend against it.

Let’s understand why they are doing this. They are slashing credit limits and closing accounts because they want to lower the amount of available credit they are responsible for. They know people are in dire financial shape and they don’t want to be stuck funding someone who may, according to the actuaries, go bankrupt. To reduce this risk, they’re reducing credit. They aren’t being mean, they aren’t targeting you, they’re just being their heartless selves and worrying about the bottom line.

So what can you do to prevent this? If you want to keep a card, start using it. Citi notified me earlier this month that they’d be canceling my Citi Professional card, a card I haven’t used in over a year. I only kept it because having an older card on my credit history helped my credit score.

If you don’t want to use it, try transferring the card’s credit limit over to another card you have with the issuer. Many are willing if the cards are of the same category. I consolidated several Citi cards a while back but the Citi Professional didn’t qualify.

Lastly, if they do lower your limit or cancel the card, try complaining. It might not always work, since it’s being driven by policy and not necessarily individual characteristics, but lodging a complaint may help you.

Have you recently had a card cancelled or a limit reduced? My life wasn’t impacted by Citi’s decision to kill my Citi Professional card but some have experienced real headaches because of it.

Jim writes about personal finance at Blueprint for Financial Prosperity.

(Photo: copleys)