Credit Cards: More limits reduced without notice

Customers are surprised when their financial institution lowers their credit card limit without notice.

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This happened to a self-employed woman who was contacted recently News magazine to complain about it.

First, she paid off the $10,000 balance on her company card and then closed the account. Then, she paid back $20,000 to her personal card, so her balance is $16,000.

Without warning her, the financial institution issuing her credit card increased her credit limit from $36,000 to $16,000, reducing her margin for maneuver.

“Excessive”

“It seems overwhelming to me,” she said, speaking on condition of anonymity.

“It is clear that I am trying to revive my situation, but the bank does not consider my efforts,” she adds. They do this to stop using my card.

At Desjardins Group, we are seeing more members and clients reducing their credit limits than ever before.

A spokeswoman, Chantal Corbeil, suggests that this year “sees an increase in cap reductions” compared to 2022.

Pierre Fortin, president of Jean Fortin’s financial restructuring, was not surprised. During the pandemic, many families have improved their financial situation, which has pushed financial institutions to increase limits on credit cards.

Economic downturn

“There may be a little bit of a return to normalcy,” Mr. Fortin said. We see that banks are having a lot of difficulty in lending. It’s tougher, financing standards are tougher because there’s definitely a slowdown [économique] Who is coming.”

According to him, financial institutions would do well to close the floodgates a little. “We limit the risk of people going into debt,” he says.

The decision to lower the credit limit “depends on an individual assessment of risks between the bank and its customers,” said Maggie Cheung, spokeswoman for the Canadian Bankers Association.

No notice required

Few people know this, but financial institutions can reduce the limit on a credit card without prior notice. However, they must notify the cardholder if they want to increase their limit.

“We can do it without sending you notice […] Lower your credit limit, for example if there are changes in your financial situation and your credit report,” we read in the National Bank credit card agreement.

The representative of this organization, Alexandre Guay, assured that the number of reductions in credit limits “is stable”. […] For the past few months.

However, at Option Consumers (OC), we see Quebecers taking the lead and asking their financial institution to lower the limit on their credit card.

Johanne Le Blanc

“If we know each other and have trouble limiting our credit use, this could be a solution to consider,” emphasizes Johan Le Blanc, budget advisor at OC.