Legal Question in Credit and Debt Law in California
Credit Card Limit Hard reduction
I have been an unlimited limit card holder with AMEX for 6 years. During this time, i have never been late, my credit score has increased by 50 pts (currently good), i have no negative reports, my income is in the top bracket, etc. I had credit problems about 10 years ago when I was going through medical residency. Just two weeks ago AMEX sent me a year lowering my limit to only $2,300 citing my credit score, credit limit. None of which make sense. I'm being punished retroactively and it's not right. Do I have a cause of action? If so, what ?
2 Answers from Attorneys
Re: Credit Card Limit Hard reduction
Probably you shopped at an establishment whose other customers became delinquent. I'm not making this up -- search nytimes.com for "american express". Among the types of purchases that will raise a red flag include "marriage counselors, tire retreading and repair shops, bars and nightclubs, pool halls, pawnshops and massage parlors." Read The Friendly Contract to determine whether or not they may arbitrarily lower your credit limit.
Re: Credit Card Limit Hard reduction
In addition to Mr. Stone's observations, various credit card companies are lowering credit card limits for many of their customers because of the economic downturn. They've also increased interest rates and minimum monthly payments. When they do so, the debt to credit ratio increases, thereby lowering the person's credit rating, and possibly having nothing to do with anything you've purchased.
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