CHARLOTTE, N.C., July 22, 2020 /PRNewswire/ -- About 70 million
people – more than one-third of credit cardholders – said they
involuntarily had a credit limit reduced or a credit card account
closed altogether in a 60-day period stretching from mid-May to
mid-July, according to a new survey from CompareCards.
Full
report: https://www.comparecards.com/blog/credit-card-limits-cut-card-accounts-closed-pandemic/
Key findings:
- About 70 million cardholders had a credit card's credit
limit reduced or a card account closed altogether by their issuer
in the past 60 days.
- Nearly 1 in 3 cardholders (34%) said they had their credit
limit reduced on at least one card in the past 60 days.
- Most credit limits were reduced by $1,000 or less, but more than 1 in 5 limits (22%)
were reduced by at least $5,000.
- Nearly 9 in 10 cardholders (89%) who had their credit limits
reduced said their card issuer notified them of the move, but
almost 1 in 6 (15%) of those said no reason was given.
- The survey also found that 1 in 4 cardholders (25%) said
they had at least one credit card closed by their card issuer in
the past 60 days.
- The most common reasons given for the reductions or
closures: Credit score decreases, inactivity and missed
payments.
- The most likely groups to be affected: Men, high-income
Americans, parents with young kids and minorities.
Card closures and credit limit reductions keep
climbing
When we first asked cardholders back in April whether they'd had
a credit card closed or credit limit slashed involuntarily during
the COVID-19 crisis, we found that nearly 50 million cardholders
had one of these actions taken against them by a card issuer.
In this most recent survey, the numbers were even bigger. The
good news is that even though a higher percentage of cardholders
said they were affected in this survey than our April report, it
appears that the pace of these actions slowed slightly.
- During the 30-day period from late March to late April, about
50 million cardholders were affected. That's 1.7 million per
day.
- During the 60 day period from mid-May to mid-July, about 70
million cardholders were affected. That's 1.1 million per day.
This latest survey shows that while virtually all groups of
people are having these actions taken against them, some are
getting hit harder than others.
- Millennials are the age group most likely to have a credit
limit slashed or a card closed.
- People with the highest incomes are the most likely to say one
of these actions had happened to them.
Most credit limit reductions weren't huge
- The most common amount of credit lost was between $501 and $1,000 –
and more than half of all reductions and closures involved
$1,000 or less.
- More than 1 in 5 (22%) cardholders who had their limits reduced
said the reductions were $5,000 or
more.
- A similar percentage of closed card accounts had credit limits
that were that high.
Most issuers notified cardholders about credit limit
reductions, though they didn't always have to
- The survey found that 89% of those whose card limits were
reduced said they had been notified.
- Among those who had received a notification that their card was
closed or their credit limit reduced, about half said they were
told it was because of a credit score decrease or a late payment.
About 1 in 4 said they were told the change happened because of
inactivity.
- Even if notified of the change, many cardholders weren't given
a reason why it happened. For example, 15% of credit limit
reduction notifications didn't include a reason.
The bottom line
We're several months into the pandemic and one of the few things
we know for certain is that no one knows exactly when this is going
to end. Because of that, it's likely that we will see banks
continue to be cautious when lending. There are simply too many
unknowns and too many risks for card issuers to handle things any
other way.
To improve your odds of a surprise credit limit cut or card
account closure, consider using any dormant cards more. Put a
small, recurring subscription – such as Spotify or Netflix – on
that little-used card to ensure that it is used each month. Then,
set up automatic payments so you never pay late. If you do have
your limits slashed or your account closed, you don't have to take
it lying down. It might be worth asking your issuer to
reconsider.
To view the full report and for more information, visit
https://www.comparecards.com/blog/credit-card-limits-cut-card-accounts-closed-pandemic/
About LendingTree
LendingTree (NASDAQ: TREE) is
the nation's leading online marketplace that connects consumers
with the choices they need to be confident in their financial
decisions. LendingTree empowers consumers to shop for financial
services the same way they would shop for airline tickets or hotel
stays, comparing multiple offers from a nationwide network of over
500 partners in one simple search, and can choose the option that
best fits their financial needs. Services include mortgage loans,
mortgage refinances, auto loans, personal loans, business loans,
student refinances, credit cards and more. Through the My
LendingTree platform, consumers receive free credit scores, credit
monitoring and recommendations to improve credit health. My
LendingTree proactively compares consumers' credit accounts against
offers on our network, and notifies consumers when there is an
opportunity to save money. In short, LendingTree's purpose is to
help simplify financial decisions for life's meaningful moments
through choice, education and support. LendingTree, LLC is a
subsidiary of LendingTree, Inc. For more information, go
to www.lendingtree.com, dial 800-555-TREE, like our Facebook
page and/or follow us on Twitter @LendingTree.
About CompareCards:CompareCards' mission is to help
people make smarter, more informed, healthier financial decisions
based on deeper knowledge of financial offers. Each month, over 2.9
million visitors come to CompareCards' website to independently
compare credit cards side-by-side and choose a credit card based on
interest rate, reward benefit, cost savings, and other factors that
are important to each person. CompareCards provides easy-to-use,
objective tools and educational resources that help people do
everything from making credit card comparisons to managing their
credit health. For more information, please visit
http://www.comparecards.com.
MEDIA CONTACT:
press@comparecards.com
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