Had your credit card canceled or spending limits slashed? You’re not alone. Credit card companies have been canceling cards or slashing limits without notice to consumers since mid-May.
This is no doubt related to the pandemic given that these companies do not want to carry the debt for consumers who cannot pay their monthly payments. But can they do this? Yes, they can. By law, they do not have to inform you as the cardholder in advance of these changes. They can just do it and so they have. Millennials who make at least $75,000 per year were the largest group affected.
Prior to the pandemic, credit card balances were at a 7-year high. Currently, the nation’s credit card debt stands at $1.1 trillion. Clearly now is not the time to run up that debt and banks do not want to implode by carrying the debt without repayment.
A good practice is to call your credit card company regularly to request lower balances – they can and do lower these rates from time to time! – and ask about your current spending power. If you cannot pay, let them know first before the deadline passes. The companies can raise your interest rates or trigger an interest rate on a no-interest introductory rate card if you miss a payment. Now is the time to be talking to your creditors and know where you stand before they yank the rug out from under you.