2023-11-29 05:00:00
Customers are surprised to see their financial institution lower their credit card limit without notice.
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This recently happened to a self-employed woman who contacted The newspaper to complain regarding it.
First, she paid the $10,000 balance on her company card, then closed the account. Then, she repaid $20,000 to her personal card, so her balance was $16,000.
Without warning her, the financial institution issuing her credit card increased her credit limit from $36,000 to $16,000, which reduced her margin for maneuver.
“Excessive”
“I find it excessive,” she says, speaking on condition of anonymity.
“It is clear that I am trying to restore my situation, but the bank does not take my efforts into account,” she adds. They do this to get me to stop using my card.”
At Desjardins Group, we recognize that more members and clients than before are seeing their credit limits lowered.
“We have seen an increase in limit reductions” this year compared to 2022, indicates a spokesperson, Chantal Corbeil.
Pierre Fortin, president of Jean Fortin Financial Reorganization, is not surprised. He notes that during the pandemic, many households saw their financial situation improve, which pushed financial institutions to increase the limits on credit cards.
Economic downturn
“There may be a slight return to normal,” says Mr. Fortin. We see that banks are having much more difficulty lending. It’s much tighter, the financing criteria are more severe because there is certainly a slowdown [économique] who is coming.”
Pierre Fortin Courtesy
According to him, financial institutions do well to close the floodgates a little. “We limit the risk for people of getting into debt,” he says.
The decision to lower a credit limit “depends on the individual assessment of risks between a bank and its customers,” says Maggie Cheung, spokesperson for the Canadian Bankers Association.
Notice not required
Few people know this, but financial institutions can lower the limit on a credit card without notifying them in advance. However, they must notify the cardholder if they wish to increase their limit.
“We can, without sending you notice […] reduce your credit limit, for example if there are changes to your financial situation and your credit report,” we read in the National Bank credit card contract.
A spokesperson for this institution, Alexandre Guay, assures that the number of reductions in credit limits has been “stable […] over the last few months.
At Option Consommateurs (OC), however, we see that Quebecers are taking the lead and themselves asking their financial institution to reduce the limit on their credit card.
Johanne Le Blanc
“If we know each other and have difficulty limiting our use of credit, this might be a solution to consider,” underlines Johanne Le Blanc, budget advisor at OC.
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