Bank of America Slashed My Credit Limit by Over $5,000 – What Does This Mean?

A Reddit user is upset that his Bank of America credit card just had its limit slashed. While the poster originally had an $11,000 balance, his limit has now been cut by over $5,000, which he discovered when he tried to use the card and it was declined.

The original poster (OP) wanted to know why the card had been declined, and other posters chimed in with some possible reasons. 

Why did the bank cut the poster’s credit limit?

Of course, the only way to get a clear answer on why the poster had his credit limit cut would be to call Bank of America directly and see if he can find out. However, there are a number of possible explanations.

Some Redditors said that the issue might be that the OP wasn’t using the card very much. Many banks will reduce your credit line, or even close your card entirely, if the card is dormant. Since it’s typically not a good thing to see old credit cards shut down or to have your credit limit reduced, this is why it is a good idea to use your card on occasion. Even if you don’t use the card often because you have moved on to others, charge one or two small purchases every few months and pay them off just to keep the card active. 

Other Redditors said that the credit limit decline may have happened if the banks ran a credit check and saw signs of red flags that could suggest the OP was getting into financial trouble. One poster who replied explained that credit card companies may reduce your credit limit if they sense economic turmoil based on a review of your finances, as they want to limit their risk exposure. 

Since the poster here said he has been carrying a balance on some cards, and he had started using the Bank of America card a lot more recently, the most likely reason for the cut in this case is that the bank got nervous he was getting too deeply into debt. 

How to build good credit using your credit cards

Unfortunately, the OP is not in a great situation here because having a credit line cut can hurt your credit score by reducing the amount of available credit that you have available to you. Credit utilization is the second most important factor in the credit scoring formula, and it is determined by dividing the credit used by the credit available.

Since the OP has now had his credit line cut, at the same time as he said he is carrying balances, he could see a big decline in his credit score due to the reduction in his account limit. Unfortunately, there’s not a whole lot he can do about that unless he can get Bank of America or some of his other card issuers to raise his limit again, or unless he can start paying down his debt. 

The reality is, credit cards can be a great tool to help you build credit, but you need to be smart about how to use them in order to make that happen. You should research to find a great cash back card or two, use the cards regularly to develop a positive payment history, but keep your balance below 30%, and pay off the bill in full every month. If you do that, hopefully your card can help you build a great score that helps ensure banks want to give you as much credit as possible, rather than cutting your limit for reasons you don’t understand. 

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