19 Sep My credit card cut my limit. What can I do?

Q. One of my credit cards with a $7,000 credit limit and no balance was just dropped down to only a $2,500 limit. I never use it and keep it for emergencies. Why would they lower the limit and what can I do?
— Borrower, sometimes

A. Credit card companies and other lenders often review accounts for inactivity.

Even accounts in good standing can see cancellations or lower credit limits.

In fact, under the Fair Credit Reporting Act, credit card companies have the right to decrease the limit whenever they want to.

It’s an attempt by the card company to lower its risk.

And it even happened to us recently with a small line of credit that’s linked to a checking account. The bank said the account hadn’t been used for two years so it would close unless we made a transaction.

Because we wanted the line to stay in place, we transferred $50 from the line of credit to the checking account. Two days later, we paid it off with 10 cents charged in interest.

With credit cards, you can ask the company why it made its decision. And then you can ask it to reconsider. If you have a good history and a solid credit score, your chances are pretty good.

To avoid this happening in the future, consider putting one of your regular bills, like a cell phone or cable bill, on the card and then pay it off every month.

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This story was originally published on Sept. 19, 2023.

NJMoneyHelp.com presents certain general financial planning principles and advice, but should never be viewed as a substitute for obtaining advice from a personal professional advisor who understands your unique individual circumstances.