If you've gotten a notice in the mail that your credit card now has a lower credit limit, higher interest rates or a smaller grace period, you are not alone. Millions of Americans have been shocked to find that adverse action has been taken against them on their existing credit lines and that the excellent credit scores they had didn't quite protect them. There are several reasons that this may happen and only some of them are directly the fault of the person who owns the credit line.
Problems with the Broader Economy
The first and most common situation is that the economy has changed. In 2008, when the Great Recession began, many credit issuers drastically cut back on the credit lines they offered their customers and increased interest rates. This was not done just to individual credit holders, but in many cases across the board. That's because the banks were worried in the wake of the subprime mortgage bust that people would have less ability to repay their debts.
Problems with One Credit Line Affect Others
Even if you have maintained a perfect record with one credit card company, that is not a guarantee that your credit account will not be suspended or otherwise adversely affected. That's because most banks are constantly monitoring their customers' credit reports. When they see that you are in trouble with another lender, they fear they may be next. In order to protect themselves, they will often lower your available credit line.
Changes in the Law
Sometimes, changes in the law affect credit terms. For example, in 2009, Congress passed legislation which reduced the ability of the banks to charge fees and raise interest rates on credit cards. The result was that many credit card companies said they would be forced to reduce or eliminate some of the perks that they offer their customers. While this may not seem as drastic as the adverse actions listed above, this is also something that may affect your credit cards, albeit not your credit score.
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