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Credit Cards: Know Your Limit?
What’s more embarrassing than having your credit card declined while checking into the honeymoon suite? Not much. But these days, the chances that your card will be declined due to a reduced credit limit are increasing.
Credit card companies are growing wary of their customers’ abilities to make payments. Our friends over at The Wall Street Journal reported that many of these companies are now decreasing their customers’ credit limits. The companies are trying to ensure that they get paid back; a customer who doesn’t borrow as much is probably more capable of paying off the loan.
Here are a few things you can do to avoid getting your credit limit slashed:
Track yourself. Major credit card companies constantly review customer accounts to check payment history, out of the ordinary spending, etc. You should do the same. Keep track of how much money you’ve spent, how close you are to the credit limit, and payment due dates. These days, most companies offer web banking which makes monitoring very easy.
Being late is not fashionable. Always, always, make payments on time. Late payments show up on your credit report (even if you’re only one day late). They’re a red flag to lenders and it’ll hurt your wallet. Interest rates can rise and you’ll end up paying a lot more than the amount you used.
Stay on top of your other payments. This includes loans, mortgages, car payments, electric bills, utilities, and anything that you need to pay off. All of these bills affect your credit score and your access to credit.
If you’re good to them, they’ll be good to you. Forming a good relationship with your credit card company can only help you. If you’ve had a credit card for a long time, and you’ve treated it well, then the company’s more likely to treat you well in return.
Carry back up. Keep another credit card with a low balance on it for emergencies. In case the one you mostly use gets declined, you’ll be prepared.
Image Credit: Documentary Maxed Out
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