Credit Reductions Surprising Business Owners

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    NEWSLETTERS

    KXAS

    A North Texas business owner has a warning for other business owners and consumers alike -- credit limit reductions can happen for any reason at any time.

    Karen Milan recently received a letter from her credit card company stating that despite her good rating, her available credit was being reduced from $50,000 to $5,000.

    Credit Card Companies Reduce Limits and Change Rates

    [DFW] Credit Card Companies Reduce Limits and Change Rates
    Even if you haven't done anything wrong and you're a customer in good standing, credit card companies can reduce your limits and change your rates. (Published Monday, Dec 29, 2008)

    Milan's small industrial appraisal company has associates that travel quite a bit and were surprised to find their cards not working while on business trips.

    "Business associates that were on the road couldn't pay for a rental car or a hotel bill without pulling out their personal debit card to do it.  They put us in an awkward position of having to find other credit," Milan said. "You have to have credit to be a business ... we can't operate on $5,000 when you're traveling."

    While the lack of credit was embarrassing and a pain in the neck for the Rowlett-based business owner, her credit card company was completely with its rights to lower her limit -- despite her good credit score and payment history.

    In tough economic times, credit card companies know people will rely more heavily on credit than normal.  The limit reductions are a hedge against delinquencies and defaults -- and those can affect any card holder.