Millions of credit card users are seeing their cards closed or limits lowered during pandemicJuly 3, 2020
BERKLEY, Mich. (WXYZ) — A lot of people who are out of work or stressed financially during this pandemic may be relying on their credit cards for some emergency relief. But millions of them are now dealing with another unexpected hurdle from their credit card companies.
“It’s infuriating to me,” exclaimed Joan Frank of Berkley.
She was surprised to learn on June 30 that credit card spending limit had been reduced.
“I make a payment religiously. I’ve never missed one. I always pay above and beyond what the minimum is. And I literally got an email two days ago [saying] we’ve reduced your spending limit,” explained Frank.
CompareCards estimates nearly 50 million American credit cardholders have been affected since the pandemic hit.
CompareCards commissioned Qualtrics to survey 1,039 credit cardholders across the country at the end of April 2020.
- 25% of credit cardholders surveyed saw their limit slashed and/or their card closed in the past 30 days
- 37% of Gen Z (ages 18-23) said they were affected
- 36% – Millennials (ages 24-39) said they were affected
- 35% – Gen X (ages 40-54) said they were affected
- Men (37%) are 3 times more likely than women (12%) to see their limits cut
According to a recent report from CompareCards, 25% of credit cardholders saw their limit slashed and/or their card closed altogether within the past 30 days before the survey – all during this pandemic.
Of the nearly 50-million American cardholders affected, CompareCards found men (37%)were three-times more likely than women (12%) to see their limits cut.
And younger credit cardholders – Gen Z – were the hardest hit group with 37-percent of those surveyed ages 18-23 had their credit limit reduced or card closed without their permission.
They were closely followed by 36% of millennials surveyed and then 35% of Gen X-ers who responded.
“It absolutely is a trend,” said Jeremy Lark, Senior Manager of Client Services for GreenPath Financial Wellness.
Lark said most Americans don’t realize that card issuers can close cards or decrease the limits without your knowledge. And the companies are doing this now, he said, to try to reduce their risk exposure.
“Many card issuers might not have noticed but all of a sudden they might only have $5,000 available on it. That can create a tough situation when right now when we know a lot of people are relying on their credit cards for things like an emergency relief fund for themselves during a tough time. And having less credit available can really put people in a tough spot. It could be another hurdle to get over,” Lark explained.
So, I asked him what can consumers do about this?
“Number one, we recommend that consumers reach out to their card issuer to ask for an explanation of why this happened and to see if they might even change their decision. They may or they may not. But it’s worth a try,” said Lark.
Lark encourages cardholders to make four goals:
- Watch your credit reports and credit usage
- Keep balances low on…