Capital One cuts credit limits as millions struggle with income cliff
Capital One is cutting the credit limits on some credit cards, with some consumers reporting on social media that their credit limits have been cut in half by the card issuer. The company said it's making the decision based on the customer's account activity in the last year.
Capital One, the third-largest card issuer, is trimming consumers' credit lines just weeks after the extra $600 in weekly unemployment benefits expired, a benefit that more than 27 million out-of-work adults had relied upon. That income cliff "will depress consumer confidence and spending and weigh on the broader economic recovery," even as consumer spending remains 5% below pre-pandemic levels, according to Oxford Economics.
The result: Credit-card issuers are tightening the reins because they're fearful that more households could face financial difficulties in the coming months, experts say. Almost one-third of U.S. credit card users had had their accounts closed or their credit limits reduced involuntarily since mid-May, CompareCards found in a July study.
Consumers should also start using their dormant cards, with Matt Schulz, chief industry analyst at CompareCards.com recommending placing a small recurring monthly charge on them, such as a Netflix subscription. He says, "That keeps the card active without breaking the bank. "
https://www.cbsnews.com/news/capital-one-lowering-credit-card-spending-limits/
