I wanted to say something helpful, but all I can think of is, "Well, at least I don't shop there."

I think I must be the only person left in America that this hasn't happened to...yet. And I'm waiting for it - we never carry a balance on our cards, ever, so the only money they're making off us is the fee merchants pay when we use our cards in their stores.

I hope someone in the know can answer this:

Since lending companies are FORCEFULLY lowering our limits, even people with an 800 FICO and perfect history, our the credit bureaus going to stop using debt to credit ratios to determine our credit score?

It is asinine to base our worthiness when we have no control over it today.

@shinseiromeo: I'm pretty sure their formula for calculating credit score is proprietary (although they have sort of a generic "summary" that they publish) so it'd be hard to say.

The only thing I can think of is that if this happens to enough people, the average credit score nationally will go down, and then they may rework it or else you'll look better in comparison to the average? Not sure though.

Gee that's funny. I find I'm hard pressed to find anything in that store that costs a $100 dollars or less.

@Hil-fish: I'm in the same boat. I haven't seen a single credit limit drop or rate increase. My mom says both happened on every single card she has. She carries a balance on all of them, but I don't have a balance on any. I keep waiting for the shoe to drop.

@shinseiromeo: Agree 100%. I thought I heard a rumor that, yes, the credit bureaus are going to adjust the way they calculate credit scores in light of this spectacularly shabby behavior on the part of the credit card companies. But maybe it was wishful thinking....

Well, I can tell you my rates and credit limits haven't changed in the past five years (9-15%, 5-10k) and my FICO has been between 660-710 forever. I also carry balances (25-50%) on my cards.

Am I their "perfect customer" now? Hmm.....

@Hil-fish: I was going to say the same, but just this morning USBank lowered my card from $8,000 to $300.

@Brianne Gibson: Got hit with a rate increase on my zero-balance CapitalOne card last month. Wifey got hit with one on her zero-balance BofA card this month. We have a credit rating that Superman would envy.

@Nicolai Hilckmann: Beat me to it. That sounds kind of stupid, if you ask me.

@Nicolai Hilckmann: Maybe Banana Republic can rename the card to "The Clearance Card- We make shopping the clearance rack easy!"

So time to stop shopping there. Problem solved!

I would assume that the banks their partnered with are making this decision, right? I work for a retailer and we don't offer a CC, but I was under the assumption that while the retailer, like Gap Inc., might control the marketing, the bank would control the financials?

@Penny Plastic: Jesus, they're....

@Nicolai Hilckmann: I was going to say that $100 is what, half a dress?

My Chase BP Visa cards limit actually went up, from $800 to $1100... So its not like this for everyone.

Working for a bank, I can say that Card Limit Reduction is a pretty common credit and fraud risk tactic...however like any tool, it's useful to customers, merchants and banks when used appropriately - i.e. considering credit and spending history, transactional patterns, etc.

To those who never carry a balance and hardly use the card, there's nothing good that can come from carrying a merchant card with a $1000+ limit...it's not like you'll be heading to BR or GAP in a time of crisis and use their card as an emergency fund.

@ekzachtly:

[www.myfico.com]

Currently it's something that they look at in the 30% part.

@HurtsSoGood: Little known fact: Superman bought those tights with a HELOC and was sent to collections.

@Nicolai Hilckmann: I only buy off the clearance rack. In my life, I've bought a dress ($75; at an outlet) and a nice suit ($300 and change) there at the actual full price.

If you don't carry a balance and can afford to shop there anyway, why do you need the credit card?

I would've made a point of cutting that card right there.

@Argy: store credit cards (I have a Gap card) have little perks like rewards dollars and special sales). it's not a necessity, but it is nice to have one or two store cards for somewhere you shop regularly (keeping in mind that they are not so hot for your credit score, as I understand it)

@Argy:

They actually give you some really good coupons.

you get a $10 gift coupon on your birthday
you get a lot of flyers- one I got a few weeks ago said 30% off all regular priced items from now till mid-April
old navy and gap coupons as well.

After seeing BR's prices shoot through the roof the last five years, I've found myself using my BR card and perks at Old Navy nowadays.

If you're disciplined, the card can get you pretty much 30-50% off with coupons and promos alone.

@Parapraxis:

oh yeah, the only bad thing is that most of the offers require you to use the BR card to take advantage of them. You have to pay with the card to get the discount.

@Argy: Cash management.

@Argy: Lets see the card used to have $1000 limit, would you want to walk around with $1000?

If your wallet gets stolen you can just call the credit card company to cancel it, you can't just call the bank to cancel your $1000 cash.

My Banana credit limit was reduced from$$900 to $200 recently. When I inquired about it, they said it was from lack of use...I hadn't charged anything on it in 18 months or something like that, so it'll be interesting to see if they bring it back up now that I've used it again a few times.

@Hil-fish: they increased mine last week without me asking. but i'm about to close that one anyway since it's an amazon.com linked card

I think this is a good time to ask them to lower my limit. I've asked before this credit crisis hit and they refused.

There's got to be some other reason we don't know why people's credit limits are being slashed. I have a credit card with $80k limit that I hardly use and if I do I pay off in full. They never reduced my limit, and everytime I go online and ask for a limit increase (because I'm bored) they grant it immediately.

We have a Bananarepublic Luxe card (spend a certain amount a year) but since we were one of the first, we supposedly get to keep it even if we spend $10 a year now. So far no limit cut for us.

@Nicolai Hilckmann: Clearly, they don't want you to shop there, they just want to load you up with lousy credit card fees.

I was in a BR recently looking for a suit, and the jackets were around $280. So maybe if you signed up for 3 cards, you could get a piece of your outfit...

Clearly, the prudent, reasoned response to an economic slowdown is to contact a list of what are presumably your best customers and basically tell them all you don't want them to shop at your store anymore. Someone's getting a bonus!

@Penny Plastic: The retailer is Gap, Inc. They're the same company. But I don't know if these decisions are controlled by BR or the issuing bank--that's a good question.

@HardyCilo: She may not carry a balance, but clearly this person does use the card. Or rather, she would be using the card if they hadn't lowered her limit.

@Argy: And yeah, what JRules said. I don't like carrying cash around because, if I lose it, it's gone forever.

@Argy: Because otherwise people get all snooty and give you dirty looks when you try to pay with cash or, heaven forbid, write a check. Besides, if you don't carry a balance, then it's more convenient than cash or check without costing you extra.

@Penny Plastic: That's correct. GE Money Bank owns the Gap/BR/Old Navy cards. While it may be in the bank's interest to cut credit lines, it is not in the interest of the store--they want customers to use their card and buy, buy, buy because people who use their store card spend like 20% more each visit than those who do not. Besides the fact that the store's name is on the card, there is really little connection between the bank and Gap, Inc. When I've had issues in the past with my card, and contacted BR to complain, I was told that BR has no control over what happens with the card. My guess is that Gap, Inc. isn't happy that GE is cutting lines--since that affects how much customers will spend in stores--but has no control over it. Obviously, they could choose to move their card to another bank, but with all the banks doing the same thing, it may not make a difference.

@magic8ball: Don't worry some places are using a separate "check verification" system that basically rejects checks no matter what your credit.

Go into the store with your $100 credit card and find something that costs $1000. Then ask for the manager. Ask if they will lower the price of the $1000 item down to $100. When the manager says "NO!" then you say, "You need to call up your corporate regional manager and chew them out hard for causing your store to lose a $1000 sale with their policy of limiting cards to only $100 just because we pay the full balance every month". Then add "And if you use a few curse words on them, I'll understand since they deserve it. Good luck". Then walk out.

@Nicolai Hilckmann: That's exactly the first thing I thought of. You can maybe find a scarf there for like $40 or something. But any jacket, sweater, slacks, etc are $100+.

Let me see if I get this straight.
There's a recession. Banana Republic sells higher-quality, higher-priced items at a time when people are switching to cheaper products. Credit/rewards cards area simple way to increase customer spending.
So Banana Republic, or their affiliate, has decided that the best action they can take is to make their promotion useless at a time when they need business the most.

I think I've figured it out. BR has just taken the next logical step in cost-cutting maneuvers. Forget India or China; Banana Republic has, rather fittingly, replaced their staff with monkeys.

The exact same thing happened to me with my Gap card. Though the Gap isn't nearly as expensive as Banana Republic, it's a little annoying trying to purchase clothing that only adds up to $100. I also would always pay my bill in full each month and was never late. The thing I don't think that the Gap (owner of Banana Republic, Old Navy, and Piperlime) understands is that when they lower their customer's available balances, they in turn are lowering how much people are going to spend at their stores, which then in turn means their profits are going to go down.

What made their decision even more insulting when it happened to me was that I had just spend enough money using my Gap card to quality for their "Premiere Gap Silver Status". Ultimately the perks are a little lame (free shipping on any amount from any of their stores, free alterations at Banana Republic, and access to a special customer service phone number). But just the fact that I went and spent all of this money over the course of a year, had my card upgraded, then they award me with a decreased credit limit was a huge slap in the face. As a result I don't even bother shopping at any of their stores because of the stunt.

Awesome strategic planning Gap!

@Nicolai Hilckmann: Everyone seems to have figured this math problem out. Close the account. It's not usable. Sounds to me like they are trying to kill their loyalty card program.

Same thing happened to me. My wife and I have a GAP card that had a $2,600 limit. We used it every couple months, never charging much or keeping more than $100 or so balance. Recently, my wife went to use the card and it was rejected. Thinking I perhaps forgot to pay the bill, I called and checked. The limit had been lowered (without prior notice) to $300.

Adding insult to injury? The notice came in the mail 3 days later.

@PhiCancri: Same thing happened to me! (I commented below). And I forgot about the "Silver Status", which I got not long after as well.

I noticed this when I got my credit report the other day. My Old Navy limit had been reduced to $162.

@mobilehavoc: Yes, and we don't know because they DON'T TELL YOU. Is it really ok if credit card companies are randomly slashing people's credit and refusing to tell them why?