If you’re running up your credit card to get through the COVID-19 health crisis, you may be in for a rude awakening. Your credit limit may have been cut in the last 30 days without any notification to you.
Comparecards reports that the situation may have touched as many as one in four Americans. Some cards have been closed by their issuers.
Comparecards, an independent, advertising-supported credit comparison service, conducted a survey of 1,039 credit card holders. They found that 25 percent of all cardholders had seen their card limits cut severely or cards closed altogether. Other findings include:
- Three in 10 cardholders have increased their credit card usage “more than ever.”
- Nearly half of all Americans do not know that the issuer of their credit card can cut their credit limit without notification at any time.
Credit card companies say they are cutting limits to reduce their potential exposure to bad debt caused by consumers spending more than they can pay back during the pandemic. While that may make business sense, it is no comfort to someone who suddenly finds themself with greatly reduced buying power. Many are using cards for essentials like groceries or medications.
The cuts have affected more “Gen Z” (age 18-23) consumers than any other group, with 37 percent saying they’ve seen a cut in their credit limit. Only eight percent of Baby Boomers (age 55-74) report an unexpected cut in their credit limits.