There is evidence that Americans are using their credit cards less as retail sales dropped in September. If you haven't used your credit card in awhile, you may be in for a surprise.
Shane Martin loves to shop online for his son's birthday gifts and he uses a credit card. “That’s what I used it for, small purchases or something online, that way if anything happens online it’s not really that big of a deal.”
His latest purchase came with a $40 surprise, a penalty for going over his credit limit. What had been a $600 limit had been reduced to just $5. Martin says he was never notified. “You couldn’t really buy a cup of coffee with $5.”
Martin is just one of thousands of Americans who are discovering their credit limits are being slashed. Consumer Reports says even customers who pay off their cards are seeing limits slashed. Martin is one of them.
The new $5 limit was imposed despite him paying off his credit card debt every month consistently for three years. “I pay it off when I’m supposed to so I guess they are just not making enough money off of me."
Consumer Reports offers this advice:
Call your card company and ask if they plan on reducing your limits.
Be extra careful when you are sorting through your junk mail not to throw out anything that could be a warning about changes from your credit card company.
HSBC has dropped the $40 penalty fee on his account, but it's refused to raise his limit. Martin says he will cancel the card.
Other credit card companies, such as American Express, admit they are slashing limits based on where customers live and where they shop.
The company would not say which stores it considers negative for customers.
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