I’ve had a store credit card for a particular home improvement store for a few years. My available credit was $2,000. The card went unused for about a year. When I moved into a new home last summer, I had reason to use the card – I needed a washing machine and refrigerator. I also decided to splurge and get a portable dishwasher (since there was no way to get the less expensive, counter-installed kind). My total charges were $1,543 and some change.

Each month my credit card statement arrived in the mail, and I would send what I could – sometimes it was just the minimum payment, sometimes I paid extra – but the company always got their payment. I have not stepped foot into the store since I bought these appliances, and have not used the credit card at all since they were purchased in August of 2008.

Imagine my surprise then, when my January 2009 statement arrived with an “over-the-limit” fee of $39 on it! How could I be over the limit when I haven’t made any new purchases?

Apparently, the credit card company lowered the credit limit below the amount I had already spent. My new credit limit was $1,090 – and I still had a balance of $1,100 on the card. I didn’t even think this would be legal – after all, they gave me a credit limit of $2,000 and I didn’t spend that much. I hadn’t made any new purchases and then they “took back” their offer to spend the money basically. I could understand lowering the limit to “reduce their risk” as the credit card companies are reporting as their reason for lowering credit limits of cardholders – but to lower it below what is already spent?! It’s sort of like if you bought groceries on sale at Walmart today, and got a phone call tomorrow saying you had to come in and pay the difference between the sale prices and the current prices because the items you purchased were no longer on sale.

After contacting the credit card company, I was told the terms and service allows them to change their credit limits at any time, to any amount they want – and that just about everyone’s credit limit had been lowered because the bank had to reduce their risk. They claimed to have sent me a letter to inform me of the change – but I didn’t receive one. Just the statement that indicated I was over-the-limit. After calling customer service, I did receive a form letter a few days later that said something to the effect of:

due to items found in your credit report, we have lowered your credit limit. If you have any questions contact the credit reporting agency.

The letter didn’t match what the customer service representative told me was the reason for the credit limit decrease – but there is absolutely nothing I can do short of paying the account in full and avoiding the store and it’s credit card all together from here on out – which I fully intend to do.  This is a lesson in why you can’t afford to carry a balance on a credit card (even with low or no interest offers!) until the new Credit Card rules take affect in July of 2010 – which will prohibit card companies from doing things like this.

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