Mangaging Credit Cards


In January my Discover Card account was canceled because I did not use the card and it had a zero balance. That has never happened before. Usually banks are eager to have their credit card in your hand in hopes you will use it buy something. My suspicion was confirmed when Amazon Chase contacted me to let me know they were reducing my credit line because I was not using their card enough! I called Chase customer service and asked them to leave my available balance alone. Yes, I know I don't max out my card every month. Sorry.


The reason for the adjustments are the result of Covid-19. Banks are afraid of credit card defaults similar to what occured in 2008 during the Financial Crises. Discover took action back in January... Hmmm. What were they told. Chase contacted me about a month ago. Their concern was not about me underutilizing credit, it was the banks attempt to limit credit default by customers unable to pay their credit card bills.


Your take away is to make sure you use your "zero" balance credit card at least once every six months. This let's the credit card company know you still love them. In addition, if your credit card company contacts you to reduce your available balance, don't let them, because it affects your credit score in the section invoving credit utilization. The highest credit scores are earned by using only a small portion of your credit card balances. Canceling accounts with zero balance or reducing credit availability increases your utilization ratio and can lower your credit score. Don't let the banks do that to you because they incorrectly assume you are going to default on your credit card debt.

Has a bank reduced your available credit? Has a bank canceled an underutilized credit account? Let me know. I'd love to hear your story!

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Ken Remsen has passed a criminal background screening

Candidate AFC®, Association for Financial Counseling and Planning Education

Member, American Association of Daily Money Managers

Insured, Lloyds of London

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