What to do if your limit was lowered or your card was canceled
When you’re stuck in a financial crisis situation, credit cards can give you some extra breathing room.
That’s especially true if you’ve already burned through your emergency savings… slashed your budget to the bone… and done everything possible to bring in more money.
Right now, millions of single moms are stuck in this impossible position. We don’t want to run up debt with so much uncertainty around, but we have to take care of our families. So we’ve been relying on credit cards more to buy the essentials.
Until the credit card companies – suddenly and without warning – cut us off.
Credit Card Companies Cut Off a Lifeline
According to a report from CompareCards, credit card companies decreased credit limits and closed accounts for nearly 50 million people last month. Exactly when we needed that financial space more than we ever have before.
These are the same companies that normally push us to spend while making minimum payments so they can keep collecting interest from us forever.
But now, when COVID-19 has single moms out of work, struggling to find child care, and desperate to keep their families fed, the corporations cut off the credit card lifeline. No notice. No warning. Just gone.
And while lack of access to credit is the biggest problem sudden credit cut-off caused, it’s not the only one.
Credit card companies don’t have to tell you that they’re lowering your credit limit. The only thing they can’t do is charge you over-limit fees caused by the reduced limit without 45 days notice. Most other changes (like rate adjustments) require 45 days notice under the Credit CARD Act of 2009.
Lower Credit Limit Can Destroy Your Credit Score
A big part of your credit score comes from your utilization, the amount of your credit that you’re actually using. For example, if you have a $1,000 credit limit and a $500 balance on your credit card, your utilization would be 50%.
If the credit card company cuts your limit to $500, you suddenly have 100% utilization… even though you didn’t do anything.
Higher utilization means lower credit score. So that slashed credit card limit also means your credit score will take a hit… meaning you could have more trouble getting credit now and in the future.
What You Can Do
If you just found out your credit limit has been lowered, you’re probably feeling angry, worried, and scared. Put that aside for a moment, and take these steps to advocate for yourself:
- Call the company that lowered your credit limit and ask them to restore it, or at least increase it. Be as calm and polite as you can – they’re probably getting a ton of calls from angry people (and it’s not the customer service rep who decreased your limit). They may not re-increase your limit… but they definitely won’t if you don’t ask.
- Try to increase the credit limit on all of your other credit cards.
- Spread out your spending over multiple credit cards, especially cards you don’t use as often. Card issuers can close down inactive credit card accounts without warning, so start using the cards stashed in your drawer.
- Apply for a new credit card. It’ll probably be harder to be approved right now. But if you generally have a good credit score and a solid credit history, you might be able to get one.
In the mean time, use any rewards points that you have in any way you can. Use them to pay for online shopping essentials… cash back into your checking account… payments on your credit card bills… anything that will help you get through right now. And don’t cancel the card! (Not yet, anyway.)
If You Need Help Covering the Basics
If you’re having trouble paying for essentials and you need help, ask for help right away.
Here are some reliable resources you can tap into until your finances are back on track:
For a variety of program options, start here: https://www.usa.gov/help-with-bills
Many drug companies, states, and charitable organizations have Patient Assistance Programs. You can find out more about them by visiting
For groceries and household necessities
- For information on SNAP, WIC, and other government-based food program access, visit https://www.usa.gov/food-help#item-213705. Due to the COVID-19 pandemic, many of the requirements to qualify have been expanded so more people will be eligible.
- Look into the Intellihelp USA group on Facebook, where members ask for what they need and other members supply it: https://www.facebook.com/groups/Intellihelp/
- For phone service, look into the Lifeline program at https://www.fcc.gov/consumers/guides/lifeline-support-affordable-communications
- For home energy, check out LIHEAP (Low Income Home Energy Assistance Program) at https://www.acf.hhs.gov/ocs/programs/liheap/about
And if you need help figuring out what to do next with your finances, please contact me. I’m offering FREE consultations now for anyone who needs them.