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My Credit Cards are Plotting Against Me

It took ten years, but I have finally learned how to use credit cards. In July 2011, I paid off my last card balance, threw a mini celebration, and moved on with my life. Yay! I still have a few cards, but I only use them when it makes sense – as in, when I can pay off the balance in full.

So this morning I decided to buy an iPad mini with my Target card. I have the money already, but I get 5% off ($16.50 in this case) and free shipping with the card, plus a $40 gift card thanks to a promotion they’re doing. I just felt like it made sense to get it cheaper, so to me that’s a justified use of credit. And the charge would have been paid off as soon as it hit my account.

Except when I clicked the button to check out I got an error message. “There was a problem processing your order. Please select a different payment method.” Hmm, must have typed the number in wrong, I thought. So I went back and entered it again. Same thing.

By this point I was kind of pissed off. I haven’t used this card since 2010 but I knew it was still active. I logged into my account and guess what? My available credit has been reduced to $200. Um… My credit is actually much better than it was when I originally applied for the card – what gives? So I called the number on the back of the card and the customer service lady tells me that my limit was cut due to inactivity.

Let’s review: Since I don’t carry a balance anymore, I am no longer allowed to maintain a decent credit limit. 

When I finished cursing a system that punishes responsibility, I decided I should probably check the limits on all my other cards. With the exception of TWO of them – the business card that I use all the time for work and the personal card I use to pay bills – all my limits have been sliced to practically nothing in the 16 months since I paid off the last of my CC debt.

Part of me feels like this shouldn’t bother me. After all, I have an emergency fund. Hell, I have a dedicated fund just for Apple products! It’s not like I need credit to buy food or other necessities (knocks on wood). Still, though, there are certain times when I might use credit. For example, if I’m getting paid for a freelance project on Monday and my refrigerator explodes tomorrow, I’m not touching my savings or the balance in my checking account. I’m going to use a card, then pay it off next week. Except I can’t do that as easily now because most of my credit limits are under $500.

The security I’ve built up – knowing I can use credit, rearrange whatever I need to, and pay off the balance in a week or two – is gone. The ability to purchase something and get cash back and/or protection in the event that the item is faulty? Gone. And while it doesn’t truly matter if I pay for something now or later (because I’m going to have to pay for it either way), it messes up my system. Since almost all my income flows through Paypal, I like to pay for things with credit, then transfer the money from Paypal to the appropriate bank account to pay off the balance. Not anymore!

I’ve really tried to emerge from my spending addiction without getting on the “credit is evil” bandwagon. But today, as I debate whether to buy the iPad mini at full price (I’m leaning toward a big fat NO on that one), it’s hard not to get mad. And I know this is a total first world problem, but what if it wasn’t? What if I needed that $315 for something that wasn’t quite an emergency but was important enough that it needed to be taken care of today?

Today’s lesson: Never depend on credit cards. They can be great when you use them correctly, but card issuers don’t like people who do that. If you assume the credit will be there when you need it, you could be setting yourself up for a major catastrophe (or minor annoyance in my case). Just another example of cash being king, as my dad likes to say.

How do you use your credit cards? Have you ever had an unexpected limit decrease after not using a card for awhile?

About Andrea Whitmer

Andrea is a freelance web designer and single mom trying to maintain a sense of humor in an otherwise chaotic world. She blogs in hopes of helping others avoid the same mistakes she made in the past. Join in the discussion here on So Over This, or connect on Facebook, Twitter, Pinterest, Instagram, or Google Plus. You can also subscribe to new posts via RSS so you never miss out!

Comments

  1. Pauline @ Reach Financial Independence says:

    Can you arrange for your electric bill to be charged on the card or some other small amount, set up an automatic repayment and keep the card active? I didn't get a decrease but I have a card that I use mostly when I am abroad, and a couple of time, since I hadn't used it for a while and forgot to warn the bank I was going away, I couldn't withdraw money or pay for things because it looked fraudulent in their system. Very inconvenient!

    • I could, but I just hate to complicate things by splitting my bill payments across different cards. Right now I use one card to pay all my bills, so it's easy to know how much I'll need to pay it off every month. I think if my limits are going to be this low, I might just cancel these cards and stick to the 2 that I use on a regular basis.

  2. "The security I’ve built up – knowing I can use credit, rearrange whatever I need to, and pay off the balance in a week or two – is gone"

    Doesn't sound like great security — keep up the positive momentum and you won't need the two week buffer.

    Maybe if the rewards are important to you, you can consolidate to a single rewards-based card, and then maybe you'll be more likely to have that one remain active?

    I'm happy with my iPad 2 now, but maybe in a year or two I'll be looking for an upgrade, and maybe then the mini will have a retina display.

    • Well obviously the real security is my savings account, but because of the way I move money between my Paypal, business, and personal accounts, credit is more like a buffer for my buffer. Paypal transfers take a few days, so I like keeping my bank balances at a certain level, then using a credit card to do what I need to in the meantime. It just works best for my accounting system.

      I got the iPad 3 as a gift and that's the only reason I want to keep it while I test the mini – I'm not sure I can give up the retina display. The difference is absolutely astounding (I was coming from the first gen) but I'd really like a smaller form factor that will fit in my purse.

  3. What you could have done was apply for the Target debit card in the store where it's tied to your debit account. You would have gotten a temporary card with your account number on it to use in the week or two it takes to get the real plastic. If you had done that, youwould have still gotten 5% off, the $40 gift card, and it would hit your debit account in 3-7 days. :)

    • That's something I'll have to check into – I didn't know they offered a debit card option. Unfortunately the closest Target is 50 miles away, so I can't just pop over to the store; driving there would negate any potential savings I'd get. But I still plan to ask about it the next time I'm there – thanks!

  4. I had a similar experience after I paid off my credit cards – I went from having a $4,000 limit to $300. I don't use the card anymore but decided to keep it open for the credit history on my credit report. I thought about using it for small purchases so that my limit would be increased, but that would be too much of a slippery slope for me.

  5. Thank budda I keep using my cards, now I need to work on the paying off part! Seems funny that it dosent work in reverse… use your card often get automatic increases.

  6. How frustrating!

    When you were on the phone, did you ask about raising your limit? If not, you might try calling again and explaning that you would like to buy something costing more than $200, so could they please increase your limit.

    I've had my limits cut due to inactivity, but the way around that is to have a card you use regularly. Your Target card is a good choice if you are a regular Target shopper.

  7. moneybeagle says:

    I don't think they lowered it because you were no longer carrying a balance, but it was because you hadn't had transactions on it in awhile. This is pretty common and is a result of banks having to get more conservative with their lending limits. They basically have limited their total pool of available credit available and if you aren't using it, they don't want to tie up your portion of the pool so they cut you back.

    We have the debit card option as someone mentioned above, where it comes right out of our checking account, and we still get the 5% and free shipping benefits that you get with the credit card.

  8. Anne @ Unique Gifter says:

    Wow, that's weird that they were all cut! Mine tend to go up and up and up. Now they have to notify me when they want to change the limits, thanks to a law from a few years ago. Can you reevaluate your credit cards and ask for a limit increase on one?

  9. Andrea, if you haven't done so, you might try phoning the credit card issuer and asking for an increase in your limit. At the least you'll learn the reason if it declines to do so. Good luck!

  10. At least Target didn't close your account completely. There are a lot of people complaining about that. Thanks for reminding me to keep my accounts up-to-date, I will be using my credit cards for something soon just to keep them active. I also need to up date my automatic transfer CC's since some expire this month.

  11. I don't blame them for decreasing your limits. Since you are basically inactive for them, they are decreasing their risk. If you have a high limit and barely use the card and it were to get stolen they would be out a lot of money real quick. Sounds like a good business practice to me, sucky for the consumer, but good for them. Just vote with your wallet and take your business to a different company that will value you more.

  12. I'm not a bit surprised, Andrea. I've decided that all of the cc companies are trying to screw us in one way or another. I'm old enough that I remember when it wasn't always like this. *sigh* From now on, keep tabs on your credit accounts so something like this doesn't happen again.

  13. Andrea I bet if you used an ebate at Target might help you save a little money. Not a lot but everything counts right?

  14. I generally use my credit card as if it were a debit. That way they don't slash my limit for inactivity, but I don't have to pay interest either.

  15. Sounds like I will want to keep using credit cards periodically even when I eventually get them all paid off so I can have the limit available in an emergency even if I have cash set aside.

  16. I personally would have asked the to raise my limit and I would think they'd go for it but who knows with credit card companies these days.

  17. Most interesting! I havent paid off my BoA card yet, but I also havent used it since February or earlier. I'm surprised they wouldnt tell you that the limit has changed… Actually, I'm not surprised! Just kind of sad they go and do it. My credit line is still 4000. I hope it stays that way, but if not, I guess that's fine too.

  18. Catherine says:

    I had a card close my account entirely after inactivity. We don't ever use credit cards but my hubby needed to reserve a hotel for work recently, tried the card and it was closed…I never authorized any such thing they just did it…and there's a balance on the card which is even stranger. They re-opened the account after I called but strange none-the-less.

  19. plantingourpennies says:

    I had to go on to our accounts after reading this to check because we have two "when the sh*t hits the fan" cards that haven't seen a single charge in years – since about 2005 or 2006. Their limits are unchanged, but maybe because they're both cards through our bank and our credit union so they can see that the checking/savings accounts that they are tied to are active.
    Wonder if this is something that happens more to store cards, since you said yours was a Target card?

  20. dagnabbit they are conspiring! good to know. thanks.

  21. We got out of the habit of using my oldest card. The expiration date passed, and I never got around to asking for a new one since we use the mileage card mainly. Then we got a letter that they had closed my account. I was annoyed — though too busy to deal with it at the time — because I'd had it for nearly 15 years at that point. A good chunk of my credit history.

    But we use the other cards enough that I think we'll be okay. Still, it's a good reminder to check the one we've not used in awhile and make sure Chase doesn't get any funny ideas.

  22. Argh. Looks like I'm going to have to find my RBC credit card and start using it at… the grocery store maybe? I don't even go to stores that accept credit cards…

  23. MoneyMasterMom says:

    I have the opposite problem. They've previously been raising my limit and I've been a little nervous someone might swipe my card and make some headaches. Now it's law in Canada they can't raise your limit without asking you. It's nice that government is starting to regulate cards a little. Hopefully they move onto cash stores next!

  24. Andrea, how is your credit rating right now? If it isn't too crippled, perhaps you would qualify for a non-limit type card, like American Express, or you could funnel all of your expenses onto one card of choice to keep it more active? Sorry to hear about your credit card woes. I soo wanted to hear about your thoughts on the iPad mini, too. Dang it.

  25. I had this same thing happen. Went to Target to buy a TV w/my Target Visa to get the 5% discount and discovered my limit had been reduced to $200. They said it was due to inactivity and would not grant an increase. For nearly two years I've used the card regularly and have called twice for credit increases and still they say that I can't request one. $200 is far too low of a limit for Target (I shop at Super Target and do my grocery shopping there too).

  26. Andrea, sounds like you really need to start investing. You can get a margin account, where you can borrow for emergency situations, then sell off stock as needed to pay back the margin. You can even get a debit card that draws on the margin account. The beauty of it is that you will be earning 15% on your investments (averaged over long periods of time) instead of paying 15% to the credit card firms. Heck, you can even buy stock in Target, if you'd like, so they would be paying you the 15%.

  27. Canadianbudgetbinder says:

    I've never had a problem where they reduced my credit limit and I've never carried a balance. Infact they call me to ask me if I want to increase my limit. I'll never understand but you are right depending on a credit card could bite someone in the arse. I have never heard of this happening until now where they reduce. I've posted this post on my FB page to see what my fans have to say. Cheers Mr.CBB

  28. Thanks for posting! I didn't even realize they could change the limit (up OR down) without notifying you, so this is good info!
    I will have to check mine, but definitely if its just a matter of activity, might be worth it like another commenter mentioned to set up auto payments for a utility bill or something on the card to keep it active, and just pay it off every month.

  29. if you really need to, pay the credit card bill before you make the charge. this gives you extra room over your normal limit. It will work as a temporary fix while you are straightening this out.

  30. Since we use our cards for pretty much everything, our limits stay where they are until I request increases. But I have always used credit cards for everything and have never carried a balance, not even once, so I am an outlier…they help me remember what we spent our money on when I work up our budget every month…

  31. The boyfriend actually got an increase after not using his card for a while. I think they psychically knew he was planning on shutting it down.

  32. So frustrating! How much did the other credit cards slice your limit to? Isn't it funny that when you are in debt up to your eyes they increase your limit, but when you are responsible they decrease it?

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