For purposes of the new Credit CARD Act, the fact that your issuer closes your account or lowers your card limit is not considered a major change in terms that requires 45-days advance notice. Here’s what the Board said about this:
“The Board is not including a decrease in a consumer’s credit limit itself as a significant change in a term that requires 45 days’ advance notice, for several reasons. First, the Board recognizes that creditors have a legitimate interest in mitigating the risk of a loss when a consumer’s creditworthiness deteriorates, and believes there would be safety and soundness concerns with requiring creditors to wait 45 days to reduce a credit limit….”
However, issuers are required to provide written notice of the credit limit decrease before they can charge you an over-limit or penalty fee – or raise your interest rate – if you go over your limit solely because the creditor reduced your credit line.
It’s beyond me why credit card companies, who have no problem calling cardholders to try to market overpriced “credit protection” plans or robo-call customers hours after a missed payment, can’t also give us courtesy calls letting us know that our credit line has been cut or closed. It could save a lot of hassles and embarrassment from consumers who haven’t realized what’s happened.
Has your credit card been closed? What happened? Share your experiences here.
Gerri Detweiler – Personal finance author and Credit Advisor for Credit.com, Gerri contributes budgeting, debt recovery and savings information online. She is also the co-author of Reduce Debt, Reduce Stress: Real Life Solutions for Solving Your Credit Crisis.
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