Credit-Line Decreases Catch Consumers Unaware (Consumer Action: Personal Finance) | SmartMoney.com

Credit-Line Decreases Catch Consumers Unaware (Consumer Action: Personal Finance) SmartMoney.com:

"If past is prologue, credit-limit decreases — and American Express is not
the only credit-card company doing this — is a reaction to what creditors
perceive as increased risk of defaults. Hurricane Katrina, for example, left
thousands of people relying on credit cards for food and necessities and at a
greatly increased risk of filing for bankruptcy. One of the most common stories
John Ulzheimer, president of Credit.com Educational Services, heard during his
visits to the area was that of credit-limit decreases. " ....

"Problem is, when that decrease is unexpected, it can be just as
damaging to one's financial situation. 'You've got to think of the collateral
damage,' Ulzheimer says. 'You could affect the consumer's score in a way that
leads other issuers to increase their rate. And then it can snowball because
payments will increase.'"