| Max Credit Card Limits Reduced |
| By Credit Federal |
Published
06/23/2008
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Financial News
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Credit Card Companies Reduce Max Credit Limit
As Americans struggle to make credit card payments; and many are making late payments, some large banks are getting so worried about potential high risk loss that they are reducing line of credit limits.
Washington Mutual reduced credit limits by 10%, and Wells Fargo reduced by 3%. Which types of cardholders are getting the reductions?
- Those who recently made a large purchase relative to their credit limit.
- Those who live in California, Florida, or Arizona (where the housing crisis has hit hardest).
- Those who own a small business in the real estate industry.
Since credit card companies have 30 days to notify cardholders of credit limit reductions, if you don't pay attention or take immediate action you could exceed your credit limit which may cost you hefty fees and damage your credit score. Credit scores are reduced for people who near their credit limit.
Make sure you know for certain the max limit of your credit card, where you stand, and; if necessary, make an emergency payment to get well below the limit.
You're likely aware that you are not the only one suffering by credit card fees. But did you know that retail stores also suffer? In fact, some gas stations may stop accepting credit cards because of the high transactions fees they must pay.
Danger ahead: Gas stations that stop taking credit cards may lose a large portion of business and end up going out of business. Approximately 66% of gas customers pay with a credit card (either because they are short of cash or to earn cashback or other rewards that lower gas costs, such as a gas credit card). Of course, there are people who use a credit, debit or ATM card because it's more convenient.
Hope: If the pending Credit Card Fee Act of 2008 passes, it will provide relief to gas retailers who can then better afford to continue accepting credit cards.
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